Block’s Indicator of Sustainable Growth

by Ray Block 

Shai Agassi, who resigned in 2007 as No2 of SAP, the world’s second largest software company in the world, and now founder and chief executive of Better Place of Alto Palo Ca has a burning ambition. The ambition is to build networks of electric car battery exchange stations and charging spots as the infrastructure necessary to grow the electric car market, and end the domination of the Middle East oil sheiks. If this could be achieved, it would be a big step forward in the march to a low carbon economy.

Renault and its affiliate Nissan, which are in alliance with Better Place is designing a plug in electric car, the eMegane, with a range of 160 km (100 miles) on one charge, with a top power of 91 horsepower. The batteries of lithium ion will initially be American probably coming from A123 Systems of Waverton Ma, and Automotive Energy Supply Corp, a joint venture of Renault and the electronic company NEC.

The compact battery exchange stations like the charging spots will be fully automated.The depleted battery is replaced with a fully charged one. All this is done within three minutes, at which stage the driver can be back on the road.

The charging spots will be about the size of a parking meter, and will be conveniently located, including at parking stations. An electric car parked next to a charging spot is automatically linked up to allow the battery to be recharged. The aim is that the battery exchange stations will be powered with renewable energy.

The business case of the venture is that the electric cars will be privately bought, but the batteries including the re-charged and replacements ones will be available only on a lease basis. Better Place will own and operate the automated batter exchange stations, and also install the charging spots. Israel is the first country chosen by Better Place, and Denmark will be the second. The third country chosen is the many times larger Australia, which is about the size of continental USA, but with only about 7 per cent of the population.

Better Place initially secured US$200 million venture capital from Israel. In the case of Australia, the plan is to have a network of battery exchange stations and numerous charging spots through the country’s three largest cities. Starting in Melbourne in the south, and passing through Sydney, and then on to Brisbane in the north, the network will cover a distance of 1362 km (851 miles). Debt capital of US$636,000 is to be supplied by the Macquarie Bank group.

No time has been set for Better Place’s Australian venture. But I assume it will be more like 2011 or 2012, when times are likely to be more buoyant. It obviously can’t start before the infrastructure is put into place.