SeekerBlog

The new issue of Innovation also includes an article by Shai Agassi. Regular readers know that Seekerblog has been a supporter of the Better Place premise — take the battery cost out of the capital cost for a new EV (electric vehicle), eliminate “range anxiety” — generate the electricity with nuclear power. Making battery cost a consumable like cellphone minutes is the essence of the Agassi business model. He never explains that the E in EV will have to come mainly from nuclear power (yes he is a marketing wizard). Indeed this article demonstrates his saavy marketing — getting a company sales pitch published in Innovations as a serious article is a bit of a coup. Excerpts:

(…) So why are people not already buying EVs? The two main reasons start with the battery: high upfront cost and a limited range.

At the moment, EVs cost significantly more up front than comparable ICEs, mostly due to the battery cost. Although this cost will drop over time as battery density improves (by roughly 50 percent every five years) and with scale, it will remain the single most expensive component in the car for the foreseeable future. No matter how much battery density improves, however, it will always limit the range.Once the battery hits the end ofits range,it must be recharged for hours if we regard the battery as a fixed unit. This “range anxiety,”the driver’s fear of reaching the end of the charge and not being able to go anywhere for hours, is especially prevalent in markets like the United States that have many long-haul routes and consumers accustomed to great mobility. Range anxiety is less of an issue in emerging markets like China and India, where people will be more than satisfied to have any range at all.

EV infrastructure is also far behind what is needed to encourage widespread adoption.Imagine a parallel:that the cell phone revolution is peaking but we have no cell towers to transmit calls.The car is not a complete product in itself;the actu- al product is personal mobility. Therefore, the complete product relies on the infrastructure being in place before people start buying the cars themselves. If we wait until 100,000 people buy EVs before we build an EV infrastructure,everyone will wait until they can be the 100,001st buyer,and we will never get there.

Also,EVs will likely have a substantial impact on the electric grid.If electrici- ty flowed automatically to any EV at the second the owner requested it,that would create a load on the system throughout the day and often right at peak hours,like the minute the driver gets home from work. That would mean that electric com- panies would have to expand capacity to match every single new electric car,watt for watt.

Finally,many of our climate goals could be defeated by the tailpipe-to-smoke- stack effect.That is,ifthe extra energy produced to drive EVs is itselfderived from fossil fuels and thus causes carbon emissions, we are not significantly cutting a car’s carbon footprint.Emissions would merely move from the tailpipe of the car to the smokestack ofthe power plant that runs on coal,oil,or another fossil fuel.

For two years after the 2005 Davos conference,I spent whatever free time I had learning about the energy sector and researched solutions to the issues described above.

I started with the science,with what I actually had.Starting from that perspec- tive led me to the conclusion that solutions other than electrons are neither short- nor long-term solutions.Any time we turn energy into a molecule (such as oil) and then turn that molecule back into energy,we lose energy along the way to heat and other by-products that are useless to our end goal of propulsion. Electricity was scientifically ideal.

After evaluating technologies for fast-charging batteries and dismissing it as a possibility,I first had to find a way to eliminate the issue ofrange anxiety.For me, the “Eureka!”moment came when I concluded that the fastest way to gain a full charge would be to simply swap out the battery,much like swapping computer bat- teries during a long flight. Here, the car industry had made a conceptual error: regarding the battery as a fixed unit within the car, which could not be removed easily or quickly.In addition to the impacts on range and price I mentioned above, I saw another consequence of having a battery that was non-removable and con- sumer owned: What happens when a battery becomes obsolete and better ones have appeared on the market? Allowing easy transfer solved this smaller problem, as well as the two broader ones ofrange and up-front price.

The concern with obsolescence became even more important once I consid- ered the rate ofbattery development.As I said above,the energy density ofbatter- ies typically improves by 50 percent every 5 years, or around 8 to 10 percent per year.This means that consumers would always have obsolete technology with fixed batteries in a product (a car) that they ordinarily own for much longer periods of time than other consumer products with similar innovation curves.

Now it might be tempting to regard this improved density as a step toward expanding the range for all EVs, when in reality it could be much more usefully allocated toward a smaller,lighter,and cheaper battery.Most ofus make few trips longer than 100 miles one way; the typical driver does it five times a year. Therefore,a longer range is not nearly as desirable as a lower-cost option.Drivers would have no reason to pay a premium for a 300-mile-range battery ifthey could switch it and have the same effective range.

Once I had completed my scientific research and innovation,I had to create a business model to implement these findings in a way that could actually have an impact on a worldwide scale.Since all the technology already existed,it was obvi- ous what we needed:not a technological innovation but a business innovation that would set up a meaningful market shift.

At first,as I considered what organization would deploy the infrastructure and manage the network,I envisioned a governmental agency.The government tradi- tionally controls matters of infrastructure and electricity,so an extension into EV networks seemed logical. But offering a competitive market solution would be much more effective in enticing customers and also had the potential to be pro- foundly profitable. It would also facilitate competition within the industry that might not be ideal from an individual firm’s perspective,but would certainly help Better Place to eventually realize its goals.

Having decided that a private venture would be the best vehicle for conversion, I then had to figure out how to create a network that would not be prohibitively expensive to install yet would be comprehensive and thus fully functional for con- sumers. The first step would be blanketing the target region with charge stations. People tend to park in four key locations: their place of residence, their place of work, shopping districts and malls, and downtown areas. If we provided charge spots at all these locations, most consumers would always have a place to plug in