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By Andrew Holland on Mar 26, 2012 with 11 responses

The Better Place Model for Electric Vehicles

Battery Cost and Range Anxiety

Last week, when I was in Denmark, I visited the Better Place showroom just outside of Copenhagen. Better Place is a new company founded in 2007 to provide customers with the opportunity to drive clean electric vehicles. Founder Shai Agassi identified that the combination of oil dependence and climate-inducing emissions were fatal flaws in our transportation system, and that the traditional auto companies could not solve these problems.

Better Place is the result of this project. It is an ambitious effort to not just make an electric car — companies like Chevrolet, Nissan, and Renault are already doing that around the world — but to interlink the electric vehicle into a new, emissions free transport and energy system. The concept is as follows: A customer walks into a showroom and purchases a car (today, only Renault Fluences are available, but more are coming). He then will sign a contract with Better Place for however many miles he drives per year, and Better Place will provide him with a battery and all the electricity he needs for that. Unlike cars such as the Chevrolet Volt or the Nissan Leaf, the initial purchase price of the car is less because the cost does not include the battery. The model is much like when you buy a mobile phone; you buy the phone from Apple or Nokia and then sign up for a service contract from AT&T or Verizon.

The battery itself is the key part of this system. Unique to Better Place’s model, it is actually a removable part of the car. Currently, the Lithium-Ion battery is able to provide a range of about 100 miles on a single charge. Better Place provides the charge through a home charging station it installs at the owner’s home, and there are additional charging stations being installed across Denmark, especially in Copenhagen. Better Place estimates that such a battery will be enough for 95% of a driver’s needs. But you cannot sell a car very well that is only 95% as good as what the consumer is used to — and that’s where Better Place’s model is unique. Across Denmark, there will be a series of battery switching stations that allow drivers to extend their range when needed. At these stations, a driver will pull into the station and the battery will be robotically removed and replaced by a fully charged one.

Better Place convincingly argues that this model will provide customers with their need for trips anywhere in Denmark, while providing a lower total cost of ownership than a traditional internal combustion car.

Integrating a Smart Grid and Renewable Energy

However, this is ultimately about even more than transportation. A network of battery operated cars across Denmark, and Better Place’s service stations full of batteries hooked-up to the grid will be a key part of a smart grid. Such a grid can more fully integrate renewable electricity into the system, at lower prices.

Denmark is very dependent upon wind power for electricity: in 2011, it provided 28% of total electricity production. The problem with wind production, however, is that it is both variable and dispersed across the country. This new network of batteries will allow the grid provider, DONG Energy (a major investor in Better Place Denmark) to manage this wind energy without the massive reserve power necessary to make sure there’s no outages in the grid. When these batteries are fully deployed, it will allow the cars to charge overnight with clean wind energy when it is most abundant — and cheapest.

Although the cars do not have the ability right now to sell electricity back to the grid, they soon will. This will allow Better Place, who manages the electricity-charging network, to act as an important middleman in the electricity grid. They can buy electricity when the supply is high, but the demand is low, and sell it during the day when supply may be lower, but the demand is higher. This will equalize the peaks and valleys in electricity supply and demand. Not only is this a good model for integrating more renewable power into the gird and increasing the grid’s efficiency, it also will position Better Place as a middleman that can make money by buying low and selling high.

Conclusion: The Concept is Promising, But Can it Scale Worldwide?

This is an ambitious effort to remake the transportation system, but I am not yet convinced it is ready for prime time in all markets around the world. Denmark, where the company will officially launch on April 1, is unique in ways that — for now — will prevent it from quickly spreading around the world. Denmark has a tax of 180% (yes – you read that right) on the purchase of cars. That tax does not apply to electric vehicles. It is also a small country made up of a peninsula and a series of islands; this geography allows Better Place to locate a relatively small amount of infrastructure to cover the whole country, and all the possible trips within it. Finally, with gasoline costing €1.83 per liter ($9.16 per gallon at current rates) and household electricity prices also high at €0.30 per KWh ($.40 per KWh), this economic model cannot work in places like the U.S. where prices are lower, spaces are bigger, and there is not as much support.

Nevertheless, this is a model that, if it proves itself in its two early-adoption areas of Denmark and Israel, could spread quickly. If oil prices continue to go up, and electricity prices go down, it could ultimately be useful in many other places. Already, Better Place claims to be planning to expand to markets similar to Denmark, like the Netherlands and Northern Germany. The first place they plan to expand in the U.S. is in Hawaii, where distance is not a problem. This is an ambitious model for integrating clean energy into the grid, and it deserves the opportunity to expand.

  1. By ben on March 26, 2012 at 7:45 pm

    If it offers credence to your recent European trek– not to mention analysis–some locals are moving the ball forward in your ackyard with a charging station initiative that aims to give EV owners a boost.   Miami-based Car Charging Group (OTCBB: CCGI) entered into an agreement with friends on the west side of the Potomac (Kettler Inc.) to install EV Level II charging stations (240 V – 32 amps) at their apartment complexes ranging from NY to the Carolinas.   The agreement calls for a sharing of venture revenue.  RFID cards for EV owner key chains will track charges while a ChargePoint GPS application provides directions to recharging stations throughout the region.

    This may only be a small demonstration of a fledgling recharding network, but it is a start in the right direction nonetheless.  Furthermore, it was advanced without any dependence on public sector capital subsidies–something even good ole Republicans should cheer:). 

    I give a lot of credit to Tesla for continuing to beat the EV drum even as the majors creep forward with their own commitments to new production.




    • By Andrew Holland on March 27, 2012 at 10:10 am

      Ben – very cool. You’re right that its a start in the right direction. Thanks for sharing – I’ll keep an eye out for them.

    • By BobS on March 29, 2012 at 1:10 pm

      The ChargePoint network is not a small, demonstration, fledgling recharging experiment, pilot project, or proof-of-concept.  Operating in 14 countries, it’s the world’s largest network of independently owned publicly-available charging stations, with over 6,000 non-residential charging points (so far) in addition to thousands in drivers’ home garages.  Car Charging Group is one of several strategic distributors.

  2. By Samuel R. Avro on March 26, 2012 at 9:03 pm

    It is also a small country made up of a peninsula and a series of islands; this geography allows Better Place to locate a relatively small amount of infrastructure to cover the whole country, and all the possible trips within it.

    You mention Hawaii in the article, but what about a state like Florida? With nearly 20 million people, it’s the third or fourth most populated state, and is a peninsula similar to Denmark. Do you think it can work there too?

    • By Andrew Holland on March 27, 2012 at 10:15 am

      Sam - 

      Good idea, I would think. The good thing about Florida would be that there’s really only two north-south Interstate corridors (I-95 on the east and I-75 on the west) and the I-4 corridor across the center. Charging stations along those highways, plus in the major cities, would make sense. Also, because of the high number of winter rental cars, it would be a good place to market it before spreading.

      But – costs would be high and the infrastructure would be significant to cover a 20 million person area. So – maybe generation 2.0.

  3. By Mimar on March 27, 2012 at 3:53 am

    The guy is a genius!
    Although replaceable batteries are not new; driving this “Better Place” project to completion is a huge undertaking. Just think of it, challenge the most powerful (figurative and literal..) companies on earth, what an audacity! I thought in the beginning they will simply pulverize him:) and they still have their chances…

    I think Better Place’s project is the killer-app for renewables and vice versa. I also hope and think that it will be viral and exponential once it’s been unleashed for the sake of our future. 



    • By Andrew Holland on March 27, 2012 at 10:18 am

      Mimar – you’re right that replaceable batteries aren’t new. In fact, I seem to remember reading that in the early 20th century, taxis in New York would be recharged by replacing the batteries.

      And – its audacious- no one else is doing this integrated approach. I’m skeptical, given the poor sales in the U.S. for EVs to date, that it will quickly get taken up here, but you’re right that it could become a viral thing if its done right.

  4. By Russ Finley on March 27, 2012 at 9:09 pm

    I’ve been reading about this for about five years now. More on the history here:

    The idea of leasing an easily replaceable battery may have merit. The swap stations don’t make much sense to me. Seems unlikely that there would be enough stations along your route on a day you need to exceed your range. Certainly, if a swap station saw the number of customers as a normal gas station, it could never charge batteries fast enough, and if it isn’t seeing that many customers, it probably won’t be financially solvent.



  5. By Ralph on March 28, 2012 at 2:39 am

    Having numerous batteries charging at the same time in a solar PV carport type structure would seem to make sense. These are already in place in most communities, they just need the solar topping. Tens of  thousands of these stations along the road would make sense too. Using induction “undercar” chargers would also make sense. As long as solar PV does the charging.

  6. By Herm on March 28, 2012 at 9:12 pm

    Renault is offering a battery lease model in Europe with their eFluence and Zoe,  presumably mechanically compatible with PBP. The car itself sells for a similar amount as an equivalent diesel, and the monthly battery lease is about the same as the fueling costs. Battery lease starts at about $100 monthly.  Supposedly  Renaults amortizes the battery in 5 years and then its just free money for the next 5 years until it wears out. The Zoe is really pretty, the eFluence is a blah sedan.

  7. By Herm on March 28, 2012 at 9:15 pm

    and eventually the Kangoo electric van also. All will use the same battery, about 24kWh.

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