As well as giving an interesting character background story on Shai Agassi, the article ran some very interesting economic arguments. Now I remain a little “agnostic” about how much REAL energy society will have left over for cars after the REAL ERoEI on renewables is finally experienced. Is a wind turbine 50 as per the Danish study, or about 24 as per “The Oil Drum”? And how much of Wind’s higher ERoEI is going to subsidize other renewables such as solar PV or even storage as in building those graphite solar thermal heat-storage boxes? Anyway, largely unknowable, and I still remain committed to New Urbanism due to its overall beauty and efficiency on our time, psychology, materials, and local ecologies. As I wrote to a friend just now: “Suburbia is too ugly, too psychologically isolating, too bland, and too materials intensive and land hogging and ecosystem destroying to be allowed to continue.”
Now to cut to the chase. The most profound part of the article was not the discussion about GPS mapping to the nearest battery swap garage or the automated robot that did the battery swap or even the fact that the clamps that hold the battery were reminiscent of WW2 bomber bay clips. Nor was it the various “range anxiety” studies that demonstrated that 80% of our suburban trips would be within the normal charge of the battery and not require swapping anyway. The most impressive concept was the sheer economics!
The only way to get consumers to use electric cars, Agassi realized, was to solve the problem of refueling. That meant, to begin with, that some entrepreneur would have to build networks of recharging spots, going country by country. As he crunched the numbers, what really struck Agassi was how lucrative a business like this could be. Powering a car by electricity — even relatively expensive “clean” energy like wind or solar — costs far less than powering it by gasoline. The Tesla all-electric sedan, for example, uses about 1 cent of electricity per mile. A comparable gasoline car uses 16 cents of gasoline per mile. And with the United States market for automobile gas at roughly $275 billion, Agassi figured that a company controlling a world network of charging stations would become so profitable so quickly that it could subsidize its customers’ electric cars, much the way mobile companies give out free phones to people who sign two-year contracts. The electric-car business, in fact, could function like the mobile-phone industry: you could pay, say, $10 for 1,000 miles, $20 for 3,000 miles, or perhaps a few hundred a month for unlimited driving.
“If I can give you miles in a more convenient, cheaper way than gasoline, you will take them,” Agassi says. “If your neighbor is driving an electric car and paying me only $30 a week for the electricity, you’re going to buy an electric car, too. If I do it without killing your kids and the planet, then it won’t even matter if it’s cheaper or not; you will just do it.”
In 2006 Agassi delivered a speech about his idea at the Saban Center for Middle East Policy, and then went back to his job at SAP. A week later, the phone rang; it was the gravelly voice of Shimon Peres. The Israeli president had been in the audience, and he practically commanded Agassi to quit SAP. “You have to do this thing,” Agassi remembers Peres telling him. “If you don’t do this, why would anybody else do it?” Agassi also had another motive: SAP’s existing C.E.O. had announced he was staying on for another two years, pushing back Agassi’s possible ascension. He announced his resignation.
Within months, he had acquired crucial political and financial backing for Better Place. Peres’s support helped; the president wanted Israel to be the company’s first test market, and Peres began working as an icebreaker inside the government, getting skeptical politicians to begin designing tax incentives and cheap debt to finance the firm. “I convinced the ministers,” Peres said. “I helped him to break through.” Peres also brokered an introduction to Carlos Ghosn, the C.E.O. of Renault-Nissan, who agreed to make the first cars with compatible batteries.