Not in a Better Place

by on March 7, 2013 at 11:50 am in Economics, Science, Travel | Permalink

Better Place, about which I was optimistic several years ago when visiting Israel, is not doing well:

Better Place, which staked out its position in the electric car market with an innovative battery-swapping technology, has sold only about 750 cars in Israel, while piling up losses of more than $500 million. Agassi was forced out of Better Place in October, his successor as CEO quit in January, and the company has put its global rollout on hold. Better Place needs to raise more money this year, and that won’t be easy, insiders say.

The devil appears mostly to be in the details. The technology works, people who use it like it, but it isn’t cheap enough yet to overcome a bunch of individually minor regulatory and societal hurdles.

One point which occurs to me is that the automatic battery-swapping technology pairs well with self-driving cars. The cars can charge themselves when not in use.

Hat tip: Brad Plumer at Wonkblog.

john personna March 7, 2013 at 11:53 am

Tesla’s positioning, as conspicuous consumption, is an odd path to “green” but it seems to be working.

Finch March 7, 2013 at 12:05 pm

How are Model S sales going? I was in one a couple of weeks ago, and I have to admit, it was a nice place to be.

john personna March 7, 2013 at 1:45 pm

I saw one on the road yesterday, kept very clean. That and the 10 or whatever “enthusiasts” who showed up to recreate the NYT route, makes me think it is working at the rich-boy-toy level.

willitts March 7, 2013 at 12:33 pm

Yes because being perceived as green is much more important than actually being green.

john personna March 7, 2013 at 1:46 pm

Total lifecycle analysis is hard. Saw a “bamboo” bicycle this week. I hate those so much more than Teslas. They are mostly epoxy, and don’t last as long as steel anyway.

DocMerlin March 7, 2013 at 3:03 pm

They are super-light and though.

dan1111 March 7, 2013 at 12:54 pm

Getting people to conspicuously consume their cars is working, but does it work as a path to green?

Anonzmous March 7, 2013 at 1:22 pm

Tesla gets your green, you get a fast, nimble car with a very short range that is hard to “refuel” and that is significantly worse for the environment per mile traveled over the car’s lifetime than a 1989 Honda CRX HF.

john personna March 7, 2013 at 1:48 pm

Should we worry that much about range when we have so many multi-car families (especially in the Tesla band)? I could have a Leaf and a Jeep and be pretty happy. The limits of the Leaf wouldn’t bother me at all.

mrpinto March 7, 2013 at 3:03 pm

What has a 1989 CRX HF to do with a Tesla Model S?

Compare used cars to used cars, new cars to new cars, little cars to little cars and big cars to big cars.

There aren’t enough 1989 CRX’s out there to transport the nation. We need used cars, so going on about the sunk cost of producing them is silliness.

A tesla is a cool piece of tech. If you have they money, it’s worth it to buy it for that reason alone. That your purchase might be subsidizing the eventual production of an electric fleet for the nation is gravy I suppose.

Your CRX column smacks of some bias that you have against potentially green-influenced purchases. You probably wouldn’t be making such logical errors if you weren’t motivated by a personal bias.

Sigivald March 7, 2013 at 3:57 pm

I think his point was that if one’s actual primary goal was “be as green as possible”, a rational analysis would not lead to buying a Tesla, pretty much ever.

(Note that contra your [not entirely unjustified] snark, while there aren’t enough 1989 CRX’s out there to transport the nation, a) there are more than there are Teslas and b) there are a lot (a WHOLE lot) of comparable cars that are, in the “green” context, perfectly substitutable goods.

If we’re talking almost-entirely greenness, we do not need to compare only new-to-new; we can compare all cars that can transport about the same loads.

I’m also not sure that we can simply ignore used cars when talking about new ones in economics anyway, since all buying decisions necessarily include ranking those against the new ones … and plenty of times the used car wins.)

Willitts March 7, 2013 at 12:32 pm

The operation was a success but the patient died anyway.

And the doctor died too.

Steven Kopits March 7, 2013 at 1:03 pm

Self-driving electric cars are most certainly not compatible with battery-swapping.

Read my piece in Foreign Policy to understand why this is so.

http://www.foreignpolicy.com/articles/2012/06/08/self_driving_car

Ronald Brak March 7, 2013 at 2:23 pm

No. Give me at least a sentence on why and then I’ll consider reading your article, but at the moment it looks like spam.

Steven Kopits March 7, 2013 at 5:02 pm

I’ll let the guys at Foreign Policy know that you think they produce spam!

The central problem of the electric car is its capital costs–about twice that of an internal combustion engine (ICE) vehicle. EV operating costs, by contrast, are a good bit lower. Therefore, an electric car can be competitive, without further battery-related innovation–if we can double its utilization rate.

What’s the constraint on the utilization rate of a car? That’s pretty clear: Its driver. Today, a car and driver are connected that way that phones used to be connected to houses. For example, my car sits in the parking lot at the train station all day while I’m at work. No one else can use it but me, so its utilization rate is only about 2% most days.

Self-driving technology would liberate the car from me and enable it to serve others during the course of the day. In the case of an EV, this would reduce unit costs per mile and make the vehicle competitive. Indeed, the vehicle could then be freed from all the optionality owned-vehicles have, and I wouldn’t have to own it. I could buy a stream of services, and, to go to the train station, I wouldn’t need a vehicle that could go more than 10 miles on a charge, carry more than one passenger, be safe on a highway, or exceed 40 mph. By liberating the car from me, it could become a specialized asset suited to a very limited role. So, you can make electric cars competitive if you change the business model. (That’s innovation, too!)

Now, Tyler is suggesting that people might buy electric cars, and hence battery swap outs could be useful. I am arguing that it’s unlikely EV’s will ever be competitive on a purchase price basis, so people will no more buy them in the future than they buy them today. But if you change the business model, then EVs can indeed be very competitive. But that business model involves a stream of services, the law of large numbers, loading balancing and very specialized vehicles that you probably wouldn’t want to own. You do not want these cars to be running around for battery swaps. That’s expensive, inefficient and unnecessary.

So, go ahead. Read the article.

And let me know next time you have something in Foreign Policy.

maguro March 7, 2013 at 5:29 pm

Why is the self-driving part important? If EVs make economic sense as taxicabs, they should make sense whether the cab is manned or unmanned.

Steven Kopits March 7, 2013 at 5:48 pm

The problem here is not EVs, but taxis. Taxis are not competitive, so the issue how to get rid of the driver, not whether the car is electric or not.

You could, and will, have gasoline-powered self-driving cars. But their advantages are muted in self-driving mode. Reliability, limited mechanical systems, ease of re-fueling, and low per mile costs have more value in self-drive mode. For example, you don’t want a driverless taxi to have to go to a gas station and fill up. You’d prefer a distributed system where these vehicles are spread around and easily accessible on say, less than 2 minutes notice on average and can fill-up/re-charge without human intervention.

In other words, all the vices of EVs–high capital cost, low range, extended recharge times, small units–all these are unimportant if they are used as a fleet of driverless taxis.

Ronald Brak March 7, 2013 at 5:51 pm

Thanks for the added information. You’ve obviously put a lot of thought and analysis into this. But I had no evidence of that before and so I wasn’t going to click on the link. I have been trained to ignore people who ask me to go to a site without giving any evidence that it’s worth my time. This is an unfortunate situation to be in, but it is the way things are. Also, when you make your point here, we can discuss it here. Which is nice.

Alex Tabarrok March 7, 2013 at 7:09 pm

Actually that was the point of what I wrote. Self-driving cars can swap batteries out by themselves which allows the cars to be used much more intensively. I didn’t say anything about owning. Do note that these cars must swap batteries ever few hundred miles.

jdm March 7, 2013 at 9:21 pm

In the most popular EVs right now, the Leaf, the Volt, and the two Teslas, it is not easy to swap the battery. The battery is in fact part of the frame of the car. It may be possible to make it easily swappable, but I doubt if it would be easy.

Under the current traditional style of ownership, I’m not sure I’d want to be swapping batteries anyway. The battery (really batteries – about 7000 18650 panasonic lithium ion 3.1 volt batteries in the Tesla; they look like extra large AAs) is really expensive and its useful life depends on how often it has been discharged. As someone who has owned a Prius, a Volt, and now a Model S (fantastic car), I would hesitate to swap out my battery for one that might be worse.

Also, the range of EVs (easily 220 miles in the winter for the 85kwh Model S, and 20% more than that in the summer) is not really an issue for most driving that people do. I’ve actually never used a public charging station – I just charge at home at night.

I hear what Kopits is saying about capital costs, but like most other kinds of technologies, the costs of battery production is falling and battery power and longevity is rising (and hopefully will continue to improve even faster as material scientists devote more research to this area). Together with the much much lower operating costs of EVs, it would not surprise me if they became competitive with ICEs in the next decade or two, especially if we ever do the right thing and put a steeply rising tax on carbon emissions.

jdm March 7, 2013 at 9:25 pm

I forgot to add that with Tesla’s supercharging stations, you can get a full charge (say 220 – 265 miles) in an hour. I’m somewhat doubt you could swap a really heavy, tightly integrated, battery faster than that.

Steven Kopits March 7, 2013 at 10:16 pm

Sorry, Alex, thought you were Tyler.

You didn’t mention ownership, to be sure. But if you had a fleet of self driving EVs, there’s no need to swap batteries. You use statistics, rather than mechanical processes of swapping out, to solve charging issues.

I see the vehicle fleet becoming more like the power generation fleet, more diversified over power sources. (Paradoxically, power generation seems to be going in just the opposite direction.) Jeremy Bentham, who does scenarios for Shell, has a chart in Shell’s “New Lens Scenarios” document which I think illustrates the trends pretty much as I see them (although I anticipate a more aggressive pace of change than he does). See slide 20 for the graph.

This is a fairly touchy-feely document, but Bentham is a smart guy to be sure, and I think there are some interesting take-aways in the Shell presentation.

http://s03.static-shell.com/content/dam/shell-new/local/corporate/Scenarios/New_Lens_Scenarios_Low_Res.pdf

And Ronald, sorry if I was a bit flip.

Ronald Brak March 7, 2013 at 10:43 pm

That’s okay, Steven. You might be amazed at how flip I can get at times.

Alexei Sadeski March 7, 2013 at 10:49 pm

> EV operating costs, by contrast, are a good bit lower.

You’re obviously not accounting for battery attrition… best estimates I’ve seen find that EV operating costs are higher than ICE.

Steven Kopits March 8, 2013 at 8:24 am

Alex -

Do you have a source on the battery data?

Alexei Sadeski March 8, 2013 at 9:48 am

Steven Kopits,

Richard Muller has a chapter dedicated to this subject in his book. Highly recommended reading – his writing is both accessible and thorough.

http://www.amazon.com/Energy-Future-Presidents-Science-Headlines/dp/0393081613

Brett March 7, 2013 at 1:07 pm

It sounds like a car rental service would be the natural starting point for this in the US. If you can get past all the regulatory hurdles in a particular metropolitan area, then you could lend these cars to people and not have to worry unless they take the car too far away from your network of charging/battery replacement stations. You might even be able to sell the novelty of renting an electric car to tourists.

Dan Weber March 7, 2013 at 2:08 pm

Do you really want to be the rental company that has to deal with idiot customers, though?

http://news.ycombinator.com/item?id=5191261 is one guy’s take.

John Thacker March 7, 2013 at 1:13 pm

The technology works, people who use it like it, but it isn’t cheap enough yet to overcome a bunch of individually minor regulatory and societal hurdles.

This sentence reminds me of Tivo.

Hazel Meade March 7, 2013 at 2:13 pm

IMO, it’s generally a bad idea to make utopian predictions about what technology the market will settle on.

And anyway, I also think it’s far more interesting to watch what the market decides on it’s own. Self-organizing systems have this way of discovering deviously innovative solutions that no human could ever predict or plan for.

DocMerlin March 7, 2013 at 6:15 pm

+1

Ronald Brak March 7, 2013 at 2:34 pm

For Better Place to succeed it had to be the cheapest way to run a taxi and then using taxis as a base it could spread. But it appears to have failed to do that. A couple of things I can see working against battery swapping for electric taxis is taxi demand usually follows a clear pattern which allows for charging during lulls in demand, and secondly, the independent contractor model may allow taxi companies to push the time cost of recharging onto owner operators.

Bill March 7, 2013 at 8:02 pm

Looks like Alex had a Solyndra problem with his prediction.

Max March 9, 2013 at 5:53 am

But he didn’t waste millions of your money. If Obama had made his decision based on prediction markets (which he helps to make illegal at least indirectly) his administration would have been more reluctant to spend on solyndra.

Richard Mason March 8, 2013 at 11:57 pm

The whole point of battery swapping, as opposed to recharging the battery inside the car, is that battery charging takes a while and battery swapping can be faster.

Therefore, I entirely disagree with Alex. Self-driving cars that can go to the recharge station by themselves reduce the inconvenience of a long recharge time and therefore reduce the attractiveness of battery swapping. Rather than the two technologies being complementary, one at least partly obviates the point of the other.

Max March 9, 2013 at 5:36 am

It’s not really surprising and in accordance with what I personally predicted, although I gave better place a higher chance to succeed than most other endeavors. Israel was a perfect testing case:small country so range isn’t the issue, high price so that the charging part is not so bad and not many highways.

However the weakest link as always is energy density and here petrol is much higher than any battery. The second part is infrastructure and it’s costs and of course service time and costs. The ultimate strike is costs of cars. They are just more expensive, because the materials are at the moment. Perhaps that changes perhaps not, if it does electric driving will leave it’s niche, if not: good riddance.

Floccina March 11, 2013 at 9:23 pm

Batteries are just too expensive at current fuel prices.

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