A company called Better Place has been testing out a switchable battery model for electric cars in Israel, Denmark and Australia. The trouble is, despite raising nearly $1 billion in venture capital, the company is struggling to make a profit.
Shahaf Kieselstein worked for the company as it was starting up, but he left before low sales figures and a change in leadership put the venture in doubt. He now works for Intel in Hillsboro and gave a talk about the Better Place model in Portland yesterday.
The company’s idea was to get a lot of electric cars on the road by providing battery switching service in addition to home charging stations – so people can drive long-distance without stopping to charge up. Service stations replace drained car batteries with fully charged ones in about five minutes.
By owning and servicing the EV batteries, Kieselstein said, Better Place aims to offer cheaper electric cars that can compete with gasoline and hold higher resale value as battery technology improves.
“You buy the car,” he said, “not the $15,000 battery pack.”
With gasoline in Israel selling for $8 a gallon, he said, the Better Place electric car system can offer significant savings per mile. Drivers can pay up front for a certain number of miles they want to drive – like a cell phone service plan – or they can pay as they go for around 26 cents per mile.
“There’s a huge delta between driving a typical mile on electricity versus gas,” said Kieselstein. “On paper it looks great.”
The system also has the potential to mitigate the threat of electric cars wreaking havoc on the power grid. With the company controlling when the batteries are charged, it could program its system to interact with a smart grid, using power when electricity is cheap and abundant and not charging at peak hours when it’s more expensive. In theory, the system would be useful for storing excess electricity and selling it back to the grid during peak hours.
But since it was unveiled last year in Israel and Denmark, the company has only sold about 500 cars. Its founder was forced out of his job as CEO, and his replacement just stepped down this week citing disagreements with management.
The switchable battery model is harder to scale than the battery-charging model that places charging stations along roadways.
“Once you have 100,000 cars on the road, what happens then?” Kieselstein said.
Better Place is still working to make the switchable battery model work. The company has rounded up additional investment, added more traditional charging stations to its services, and sold several fleets including a fleet of electric taxis for San Francisco. But the future is still uncertain.
An earnings report in November said the company had racked up a $561.5 million deficit with more losses expected. Better Place committed to producing 100,000 electric cars in 2008, and has a long way to go to sell that many. Kieselstein noted that a lot of investment is going into the charging station electric car model, and Better Place stands alone in backing switchable batteries.
“The investors put a lot of money into this,” he said, “and they’re nervous they’re not going to get it back.”