AUTOS/CHARGING =2

Trade the News

Friday September 10, 2010 06:05:11 PM GMT

The swap station model's main selling point is speed. Charging an EV battery can take up to eight hours. By switching batteries instead, that wait is reduced to three to four minutes. The company says its business model -- a subscription plan which covers the use of switch stations, the lease of a battery and the electricity used -- cuts a large cost item, the battery, out of the upfront price tag for the car.

"The underlying assumption that we're working by is that this is too big a market to do half solutions," says Jason Wolf, head of Better Place North America. "You're not going to get to mass adoption by people paying a premium because they want to be green or any other reason."

Early adopters, he says, will always buy cars like the Nissan Leaf and the Tesla Roadster, which retail at about $33,000 and $109,000 respectively. Better Place will reach beyond that niche to the drivers -- commuters, salespeople, small business owners -- who put tens and even hundreds of thousands of miles a year on the clock. "There's not a problem getting early adopters. That's great, we need them and we support those types of vehicles, but really where the heart of the market lies is the third of drivers who are burning two thirds of the gasoline."

CAN SWITCHING GET HIP?

But questions remain. In Israel, industry heavyweights including two of the country's biggest car fleets have adopted a wait-and-see approach to Better Place's trial. Eldan, a major leasing company whose cars are ubiquitous on Israeli roads, says it is in close contact with Better Place, but will not sign on until the electric-powered vehicles arrive and the technology is in place. "At that time we can determine its quality and will positively consider a relationship with the company," Eldan said in a statement.

There's also little sign that major automakers are ready to start producing cars with "switchable" batteries. The Israel and Denmark schemes both benefit from generous local tax breaks for non-polluting cars, and will use Renault's Fluence ZE model. So far, Renault is the only carmaker to announce a switchable car. Renault's decision was helped by Better Place guaranteeing a production run of 100,000.

With 57,000 soft orders for the car by July -- most of them from fleet companies -- interest in the Fluence ZE has been greater than expected, insists Better Place. Still, prospective customers have paid no deposit nor made any financial commitment to buy.

"Better Place was a catalyst for Renault to go mass market with the electric version of Fluence," says a Renault spokeswoman, adding that it was "hard to say" whether the model would have seen daylight without that guarantee.

Wolf concedes that Better Place will have problems if it can't convince other automakers to join the French carmaker in embracing "switchable" batteries. But "given where we are in discussions (with automakers) and the logic behind it that all of them see, I don't see it as a major concern," he says.

Perhaps. But even if Better Place can convince other automakers of the logic of its model, there's still the question of what sort of batteries they would use. The electric vehicles on the road or in the works all use batteries of different types -- nickel sodium chloride, lithium-ion, lithium-metal-polymer -- and sizes.

Better Place says it expects to cater for about three different battery types -- more would impose greater warehousing demands at its switch stations -- and predicts other carmakers will eventually settle on one of those types.

"You may hold an inventory of two, three types at first and over time what's going to happen is that pressures for OEMs (carmakers) to differentiate on batteries goes away, because you're manufacturer number three, four, five and you haven't already developed your own battery. At that point you're just going to take the least-cost, or best product for the overall vehicle," argues Wolf.

POWER-SHARING

Automakers, though, say standardised batteries are far from inevitable. The world's biggest carmaker Toyota says it will continue to prioritise building cars for safety and performance, not to make it easy to get a battery in and out. There's also the fact that auto owners and manufacturers will be unable to track a battery -- where it's been, the conditions it faced -- which might make it difficult to diagnose problems in a car.

"It is hard to imagine," says Toyota's Managing Director in Europe Graham Smith, of standardised batteries. "What if a manufacturer feels like they can move faster?"

For now, Toyota and General Motors have both chosen a dual, plug-in electric-gasoline approach which by-passes the need for charging away from home.

Even carmakers focused on pure EVs are hesitant to sign up. "Every manufacturer has a different battery type, battery size, method for removing the battery," says Andy Wertheim, general manager of environmental affairs at Mitsubishi in Britain. "Certainly at the moment we see that battery swapping is not relevant for us and for the foreseeable future."

Nissan, which shares a CEO in its alliance with Renault, also has doubts, citing its own research that shows that people prefer to own rather than lease a battery. "There are different battery layouts, batteries are shaped differently. That means even between Nissan and Renault already there are two types of battery. So I just think: how do you store those?" asks Jerry Hardcastle, vice president of vehicle design and development at Nissan Motor Co's technical centre Europe. Nevertheless, he concedes the Better Place model might eventually work. "We're watching very closely what's going on in Israel."

THE COMING NETWORK?

Better Place's main competition will come from extended range cars or the myriad companies building and promoting charge spots or stations: parking meter-like posts on a street, in a car park or elsewhere into which you plug your car to top up its battery.

One such is California-based ECOtality, which has won $130 million funding from the U.S. Department of Energy to install and trial charge spots across the United States. The company expects to install 20,000 stations by May next year.

Other big players in the fast-growing market are U.S.-based Coulomb Technologies, which has about 850 vehicle charge spots installed, Britain's Elektromotive, which has about 1,000, and AeroVironment, which has some 14,000 industrial chargers for the likes of fork lift trucks. Better Place also plans to install charge spots alongside its switch station hubs.

"We view this as like cellphone coverage: the person with the largest network is ultimately going to win," says Jonathan Read, chief executive and president of ECOtality. "Better Place is going to take a long time and a lot of money to roll it out. We're able to hit the ground and have a greater network distribution before they even start putting their first chargers in the ground."

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