Friday, March 25, 2011

Better Place Fairy Tale Crumbles

In an earlier post I pointed out many of the shortcomings of the BP business plan Better Place Exposed .  Not surprisingly one of BP's largest early partners has just come to realize that the swap station concept makes no economic sense.
the battery swapping system couldn’t possibly make good business sense yet, adding “[B]ut at £1million ($1.6 million) a piece we’re not going to see widespread stations yet. That is, until we see more cars on the road.”
 Swapping Too Expensive
Of course by the time we see more cars on the road we'll already have many more charging stations available and improved battery technology will allow cars to go even further on a single charge.  Who would have guessed?


  1. Why did you omit,“Better Place is brilliant,” said Renault U.K. head of electric vehicle program Andy Heiron...He continued, explaining that while the idea was sound...”
    I'm listening to Shai Agassi on this
    video. He is very polished and convincing.

  2. Yes he's as polished and convincing as any snake oil salesman. It really doesn't matter if they say BP is brilliant when they also say it doesn't make good business sense. A brilliant scam is still a scam.

  3. You didn't answer my question: Why did you omit,“Better Place is brilliant,” said Renault U.K. head of electric vehicle program Andy Heiron...He continued, explaining that while the idea was sound...”?

    I would personally prefer to be off the grid and own my own PV solar charged EV battery pack, renting a car when the very occasional longer trip is needed. This being said, the Tokyo Better Place battery switch station is a thing of beauty! And if Better Place is a flop, you will not have lost a cent. A pull-along range extender [biodiesel/cng generator, or large battery pack] might effectively challenge Better Place.

  4. I clearly answered your question, you apparently didn't understand the answer. To be clear, the "brilliance" of the idea is meaningless if it can't succeed. A business that doesn't make good business sense is no business at all. Yes the engineering of the swap station is very cool, that doesn't change the fact that it's not cost competitive or even necessary. There are other better alternatives, which you yourself point out above, ICE rental or genset trailer rental, which require no expensive infrastructure to create. Why spend all this money on swap stations for Israel when a LEAF can already travel the entire length on a single charge? I suggest you read my other post on the subject and the commentary, I rather clearly lay out all of the various problems with the whole concept.

  5. Better Place is betting a sufficient number of vehicles will be available to justify its investments. 70,000+ Renault EVs are said to have been ordered. And I can travel to the post office on a single charge in a LEAF, too, but I can't take a LEAF to the next city and back on a single charge without sweating bullets. The length of Israel is of no matter: battery pack switching technology is presumably for those willing to pay for a convenience. A bag of ice in a supermarket is often less expensive than a bag of ice in a convenience store, yet convenience stores sell boat loads of ice. Developing a highway traffic safety approved pull-along range extending trailer and the maintenance tech and rental chain outlets would also be expensive. I own a pickup. Renting a trailer and making sure it is connected properly and towed safely can be a headache. The swapped battery would not alter a car's driving character, either. You do not seem to be fully appreciating the convenience afforded by the battery swapping stations.

  6. You do not seem to be fully appreciating the costs involved in making this unnecessary swapping system work. The size of Israel is quite relevant. In a country the size of the US the average daily miles are less than 40, in Israel I'll bet it's less than 20. Since a LEAF can already do 100 on a charge a few fast charge stations would more than allow all reasonable travel in Israel, no swapping involved.
    Your ice analogy fails if people had bags of ice sitting in their freezer at home every morning instead of a small bin of cubes. That's what owning an EV is like, having a full charge every morning when you leave home. How often would people stop at a gas station if their tank were full every morning? Gas stations wouldn't survive in such a situation, neither will swap stations. People are too hung up on making EV's perform exactly as gasoline vehicles do. Until EV's are sitting on dealer lots unsold because they don't have enough range it's really not an issue. Since the EV's that are available can't keep up with demand I'd say it's not an issue at all. Since batteries will continue to improve and fast charging stations will continue to be built I'd say it's never going to be an issue.
    Genset trailers are only one of the many inexpensive options that can be used to extend the range of EV's. I hook up trailers all the time, it's quite simple. Car rental, fast charge stations, and the fact that most households have more than one vehicle are all examples of why swapping isn't necessary. If you really need a lot of range most of the time then get a plug in hybrid.

  7. The battery swapping system is only invalid if there are no customers. Few persons need you to protect them from what you seem to imagine is a predatory business enterprise. The ice analogy does not fail: it is not uncommon to need more ice than is on hand at home and especially when the ice melts away from home. In my area of the United States convenience store ice can easily be 50-100%e more expensive than the same amount of ice sold in a supermarket. While I avoid buying convenience store ice, it is none of my business or concern if others deem $2.50 fair market value for ten or so pounds of ice. Surely you are not so bold as to believe convenience stores do not have willing consumers of higher priced ice? The consumers and certainly the vendors are happy with the fair market valuation of the convenience store ice, the former willing to pay more for the convenience afforded by the latter. Similarly, Better Place customers might pay more for the convenience [vastly extended ranges and greatly reduced downtime]. The following videos help prove the value and utility of the Better Place model.

    Better Place Tokyo battery swapping station:

    A day in the life with a Better Place electric vehicle (EV):

  8. Those videos "prove" nothing, they simply project the use of their product. I know hundreds of EV drivers, including myself, none of us have swappable packs, none of us care. We are quite happy to be free of the gas station paradigm that BP is trying to impose on EV's. The whole BP model from swapping to their charge network increases the cost of EV's. You still miss the basic point that BP will make EV's more expensive, not less, and we need less expensive EV's. It's my concern if auto makers buy into the BP fantasy and spend extra time making swap compatible packs, which will make EV's more expensive, and if money is spent on swap stations, which will also make EV's more expensive. People are obsessed with this range idea, as you are proving, when it's a small percentage of actual vehicle use. I've explained why it's not a real problem and never will be.

  9. Again, if Better Place doesn't offer an appealing product, it will fail. A swappable battery affords obvious benefits, and many won't mind paying more for the convenience and the peace of mind this offers. Market forces/fair market valuation will determine if Better Place succeeds. I can purchase ice locally in a number of places: convenience stores [8 lbs ~ $2.40], supermarkets [10 lbs ~ $2.10], robotic ice kiosks [20 lbs - $1.75]. And I'm curious, does your EV have lead acid, NiMH, or a Li chemistry battery pack? What is the range? For your argument to be consistent, you'd better be using less expensive lead acid batteries, eh?

  10. My Lithium pack will far outlast any lead pack and improves the performance of the vehicle over lead as well as making it more efficient, giving me 50 miles of range, which lead could not. Over time the lithium cells will cost less than a lead pack that would need to be replaced many times. So paying more up front works out to cheaper lifetime operation. Rather the opposite of BP, which gives you artificially lower upfront costs but higher lifetime costs.
    Your ice analogy still fails since no one has bags of ice sitting at home or in a cooler in the car, which they would if your analogy were talking about EV's. If so they'd never buy ice. Besides, ice doesn't need a non existing infrastructure or complex swapping technology. It's really a horrible analogy, but it seems you're as intent on sticking with it as you are with BP.

  11. The bagged ice analogy validates convenience = commodity. Your own choice of battery chemistry is very telling. What is the factory warranty on your pack of lithium batteries? I'm supposing you have no guarantee of how long your batteries will last, so your investment is something of a crapshoot in its own right. Odd how you rationalize your bet on and payment for premium equipment when the option of doing so much more with less* was there for you. Consider that a classic case of sunk cost anxiety may explain your animus toward Better Place battery swapping technology.

    200 Miles on Used Lead

    Is it really possible to build an electric car that can travel at highway speeds for 200 miles on old lead-acid batteries and do it at a cost of around $3000? Believe it or not, that's what David Cloud has done with his highly modified -- and we mean highly modified -- Geo Metro...

  12. You think all the work that Dave put into that car was doing "more with less"? I guess you put no price at all on the time and money required to create that vehicle. Not to mention that I, and most people, have no desire to drive around in something that looks like a missile. It's another ridiculous comparison and does nothing to make your case. As for my cells they came with a 2 year warranty, I know people with older generations of similar cells that are still going strong after 5 years. Sure there is some risk involved, as with anything, but I didn't ask investors or governments to subsidize my project,unlike BP.
    As to convenience, there is nothing more convenient that having bags of ice at home almost for free. Your problem is you see swapping as the only option to extend range when fast charging can do the same for lower costs. Sure it takes a little longer but so what? Most people have no problem taking a 15 minute break on a long trip, but we are no where near the point where we need to worry about that. There are millions of EV's to be sold to millions of people who don't care about using them for long range driving. BP is irrelevant at this time and will continue to be so as vehicles and infrastructure to charge them improves.

  13. Many people would not want to wait 30 minutes and more for recharging with each 100 miles of driving. Your argument continues to fall apart because you do not recognize that other folks' time is valuable to them. While you are quick to put an price on the time and effort involved in building a more with less car, you are completely blind to the fact that many will be happy to pay more for the convenience of battery swapping, just as many pay more for convenience store ice.

  14. Fast charge stations can recharge vehicles in 10-15 minutes and it won't be long before vehicles come with 200 mile packs. I already stop for 10-15 minutes during a 200 mile trip, as do many people, it's not a hardship. More to the point, those trips rarely happen at all. Israel is a small country with most of the roads and population in the northern half. Average daily miles are probably less than 30. Take a look through this article:
    Some choice quotes:

    "in typical Israeli fashion – most of the goals were not met. Despite promising to begin delivery of cars in the beginning of 2011, Better Place has not sold a single car over the four months that passed since New Year’s Eve. And the number of battery switch stations built in Israel was – you guessed it – exactly zero. Until now."

    "Despite already announcing its pricing schemes in Denmark in the beginning of this month, Better Place refuses to reveal Israeli prices at this time. An internal Better Place memo which leaked to the Israeli press, however, sets the price of the Renault Fluence Z.E at 123,000 NIS, or about $34,500."

    "If the Danish pricing schemes are of any indication, Better Place is expected to offer several different plans for various mileages. In Denmark, the most expensive plan – allowing for unlimited mileage –costs the user about 400 euros (or about $550) per month, while the most basic – allowing for up to 12,000 miles per year – costs from 200 ($280) to 250 ($350) euros. Considering Israel’s slightly higher gasoline prices, the appropriate plans in the Holy Land will likely cost more compared to Denmark.

    "And if those prices sound a bit high to you, it’s probably because they are. A very rough calculation puts one month of Denmark-priced gasoline for an average compact car travelling 12,000 annual miles very close to the price Better Place offers for that mileage, and perhaps even slightly higher. It seems that Better Place’s main lure would be the ‘unlimited’ packages. On its end, Better Place doesn’t try to refute this claim, only going as far as promising running costs “comparable or lower” to those of equivalent gasoline vehicles."

    The "unlimited" package would be a total waste in a country the size of Israel with hostile countries all around it. Not exactly a road trip friendly area.


    Better Place launches 1st Israeli battery-switching station: Infrastructures Minister Landau recites ‘Shehecheyanu’ blessing, calling it a first step toward weaning the country from enemy resources

    "...The station is the first of approximately 40 stations to operate around the country in the near term, nine of which have already been completed."

    "...Better Place’s partners at Renault were equally enthused about Wednesday’s launch.

    “Renault is confident that this strategy will bring modernity back to the car industry and pave the way for cleaner, greener, quieter car industry,” said Katsumi Nakamura..."

    "About 10,000 people signed an “interested” list for the cars in Israel, he added."

  16. I'd prefer you didn't clog up my blog with press releases. I've expressed my take quite clearly, you've repeated your single argument of convenience, unless you have something new to add we should just agree to disagree. Even if BP manages to open a bunch of swap stations and sell a bunch of vehicles that still doesn't mean it's a sustainable business model in the long run.

  17. Correct JP
    The Battery Swap Business will end in the short future because it is not a sustainable business model.
    Lucky for us potential BP costumers, we will have the new long range packs and the short range can go to Hawaii.
    The naysayers (you included JP) will be dragging their 3 y/o LiFePO packs, only 1000/3000 cycles used, around wondering "how could I have been so blind to a brilliant idea".

    pb, remember Shai's intelligence test for the Danish. Some people just don't understand.

    Rock on Jack Rickard