Green Wombat

Former SAP (SAP) top exec Shai Agassi unveiled his new venture last night in the pixels of the online editions of the Wall Street Journal and The New York Times: A startup backed by $200 million that will lease removable batteries for electric cars. The company will also build a network of battery-charging stations and battery replacement centers. It appears that Agassi’s company, called Project Better Place, won’t spend its considerable cash hoard on developing new battery technology or electric cars themselves. Instead, according to the articles’ somewhat differing takes, Agassi seeks to extend the range of existing electric car batteries by making it easy to charge up or swap power packs on the road. The company would make money by renting batteries to car owners and charging them to charge up.

"The business model for the electric cars will be similar to that used by mobile phone operators," the company says on its site. "In the same way that wireless operators deploy a network of cell towers to provide an area of mobile phone coverage, Project Better Place will establish a network of charging spots and battery exchange stations to provide ubiquitous access to electricity to power electric vehicles.  The company will partner with car makers and source batteries so that consumers who subscribe to the network can get subsidized vehicles which are cheaper to buy and operate than today�s fuel-based cars. Consumers will still own their cars and will have multiple car models to choose from."

Among the big names backing Agassi are Israeli holding company Israel Corp, Morgan Stanley (MS), Tesla investor VantagePoint Venture
Partners, former World Bank chief James Wolfensohn and Edgar Bronfman, Sr.

Battery leasing is an idea that’s gaining currency among electric car companies. Batteries typically account for half the cost of an electric vehicle,
requiring that buyers essentially prepay upfront for years of fuel cost. Norwegian EV maker Think, for instance, plans to sell its City urban runabout and charge a monthly "mobility" fee that will include the battery lease as well as other features like insurance. General Motors (GM) is exploring a similar idea for its Volt electric hybrid under development. Utilities like PG&E (PCG), meanwhile, have expressed interest in buying tens of thousands of used EV batteries to store renewable energy produced by solar arrays and wind farms for use when power demand peaks. Such a secondary market for electric car batteries potentially makes leasing schemes viable.

Agassi will face competition from Capricorn Investment Group, a Palo Alto private equity firm that also intends to launch a battery-leasing company to jump-start the EV market. Capricorn has invested in both Think and Tesla Motors, the Silicon Valley startup that is building the Roadster supercar.

The risk Agassi faces is that companies like Tesla, which itself has raised more than $100 million, will develop long-range electric car batteries that make a network of charging stations and battery replacement stations superfluous. Tesla, for example, says its latest tests show the Roadster will go 245 miles between charges in combined city and highway driving. Still, it’ll be some time before an electric car goes 400 miles on a charge and Agassi has $200 million to play with. A few months ago, Tesla co-founder Martin Eberhard spoke to Green Wombat about the potential for EV battery leasing. "I would love to see that work," he said. "It may work for us down the road. I think it�s a great idea."

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Tesla Motors’ announcement that it is delaying production of its electric Roadster sports car until early 2008 to deal with quality-control issues has generated a lot of news coverage. (The car had been set to go into production later this year.) Less attention was paid to the Silicon Valley car company’s other news: EPA-approved testing shows that the Roadster will go 245 miles on a single charge in combined city/highway driving. (If you’re just zooming around town the range is 255 miles while a road trip will take you 235 miles before you need to plug in.) Tesla originally promised the Roadster would have a 250-mile range and then downgraded that estimate earlier this year to around 200 miles. If the new numbers hold up in extended real-life driving, it’s a significant milestone in the development of electric cars. The last production electric car, General Motors’ (GM) EV1 had a top range of about 140 miles. The ability to go 235-255 miles on a charge gives the Roadster a range competitive with fossil-fuel powered cars. (Of course, the nearly $100,000 two-seater is not competitive on price and you’ll be lucky to fit a bag or two of groceries in the trunk.)

According to Tesla’s blog, road tests also found that the car went 267 miles when driven "conservatively" around the Silicon Valley suburb of San Carlos; 230 miles on a grip to Lake Tahoe with two people and luggage; 186 miles when driven "aggressively" on the highway; and 165 miles in a "worst-case scenario" that consisted of "impatient commuting, aggressive stops and starts, high speeds" with the air conditioning blasting.

When Green Wombat interviewed Tesla founder Martin Eberhard in June, he commented on the extraordinary challenges of building an electric car company from the ground up. "Every single little problem that we�re dealing now is doable, but there�s lots of them," says Eberhard.  "Starting a car company is hard. We have an exotic car, with an entirely new drive train, and we�re putting together a supply chain from both automotive and non-automotive sources around the world. And we have all kinds of regulatory requirements."

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photos: green wombat
Tesla Motors is Silicon Valley’s first car company, founded by geeks rather than gearheads. The startup behind the forthcoming all-electric Roadster sports car may also be the first Web 2.0  automaker.  Tesla execs regularly blog, detailing the development of the zero-to-60-in-four-seconds, $98,000 Roadster and engaging potential buyers and green car supporters in discussions about everything from the engineering challenges of producing an EV to marketing strategies.  Now the San Carlos company is tapping its fan base to gather data to be used in designing home charging stations for the Roadster and, presumably, for future cars like the WhiteStar electric sedan under development.

In a blog post last week, Tesla founder and president of technology Martin Eberhard asked EV enthusiasts to download an Excel spreadsheet to record information about their home’s circuitry and the electrical load created by their various appliances. "Okay everybody, I need a little help from you," wrote Eberhard. "What is the biggest EV charging circuit that could be installed in your house? This sounds like an easy question, but it turns out not to be. The answer depends on a lot of factors….Help me out here: Download the spreadsheet, roll up your sleeves, survey your own electrical service, and report back to me. If you are really inspired, do a few more houses � your parents, your brother, your neighbor, whatever." (Tesla is also getting help from California utility PG&E (PCG) on the home-charging front. A prototype charging station is pictured at right.) Telsa communications director David Vespremi told Green Wombat that more than 30 people have sent in surveys over the past week.

Back in June, Green Wombat sat down with Eberhard at Tesla’s headquarters to talk about electric cars and the benefits of blogging the development of the Roadster. "We get more customer feedback, more market data than you could ever get from the most expensive market survey you could pay for," Eberhard says. "Being open and getting feedback has been tremendously useful to us. I’m not a big believer in market surveys and focus groups. They’re useful for small things, like ‘does this user interface actually work?’ On the hand with the blogs its a constant conversation and the amount of data and the quality of it is very good. We know our customers, what they know and don’t know, how to target our messaging, and whether our message is getting through. I think the secrecy thing is overrated."

And it goes without saying, that’s a great PR and marketing strategy. Eberhard, of course, acknowledges that Tesla keeps its core technology secret. And that as a startup that has yet to put its first car into production, the company can afford to be more open than competitors who can’t risk killing demand their current lineup of cars by disclosing too much information about the next model.  "If I had already some other sports car on the road and was coming out with the Roadster I’d have to be more careful about it," he says. "With WhiteStar we’re taking a pretty calculated gamble that people who would opt for WhiteStar, most of them wouldn’t have opted for a Roadster anyway. We’ll have to be a little more careful down the road, that’s just the market reality. We’ll try to remain an open and transparent company. Even if I’m not telling people about features on the car, I’ll tell people why."

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photo: green wombat
In another step toward creating an alternative automotive infrastructure, Silicon Valley electric car company Tesla Motors and California utility PG&E said today they will collaborate on developing "smart charging" technology. That will allow cars like Tesla’s forthcoming Roadster to be juiced up by remote control, giving utilities the ability to control when the vehicle is charged, say, when electricity demand is low – and power cheap – or when solar, wind and other renewable energy comes online. Smart charging also lets utilities set the rate of charging to balance power demands on the grid. It’s part of a developing vehicle-to-grid system where one day it’s hoped that electric vehicles and plug-in hybrid cars will be able to transmit power back to the grid when demand peaks to avoid using carbon-spewing power plants.  PG&E (PCG) said it anticipates integrating the Tesla smart charging technology into its SmartMeter program, which could give electric car owners a break on their utility bills if they charge their cars at certain times of the day. Other utilities, like Southern California Edison (EIX), are working on similar initiatives.

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Hoping to jump-start innovation in "sustainable transportation," Google.org – the search giant’s philanthropic arm –  today issued a $10 million request for proposals for projects that will promote the commercialization of plug-in hybrid vehicles, electric cars and vehicle-to-grid technology. "We plan to invest amounts ranging from $500,000 to $2,000,000 in selected for-profit companies," said Google.org. "While $10 million is a fraction of the total investment needed to transform our transportation sector, we hope this RFP will help catalyze a broader response. We need the automakers to bring these cars to market, but plug-in vehicles also need an entire ecosystem of companies flourish." The grants are part of Google.org’s (GOOG) RechargeIt.org initiative. In June, the company unveiled a solar-powered parking bay and recharging stations it created with utility PG&E (PCG) where workers can juice up a fleet of plug-in hybrid cars that Google is creating for an employee car-sharing service. Google is also testing several plug-in Toyota Priuses (TM) to assess their potential to serve as mobile generators, transferring electricity back to the grid from their batteries during times of peak demand.

That’s good for the environment and a weapon in the fight against global warming. But it also could be a big business opportunity for Google if plug-in vehicles and vehicle-to-grid (V2G) become common. Imagine the data and network management infrastructure needed to figure out where millions of cars are plugged in at any given moment, determining the power level of their batteries, and matching that with the demands of the power grid. Green Wombat happened to be at the Googleplex on Saturday and asked Dan Reicher, Google.org’s director of climate and energy initiatives, about whether the company has a role to play in V2G. "It’s clearly a data management challenge and there are things we can do, but it’s unclear if it’s a big business opportunity," he said.

What Google is doing now is collecting data on the performance of plug-in hybrid Priuses. On Saturday, Reicher showed the latest additions to Google’s plug-in fleet. Since may, hundreds of Google employees have been using the modified Priuses to run errands and as they tool around Silicon Valley black boxes installed in the cars record data on the driving conditions, fuel efficiency and other factors.

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photo: PNNL
Will the car of the future be powered by hydrogen pellets? Scientists at the U.S. Department of Energy’s Pacific Northwest National Laboratory in Richland, Washington, are investigating the feasibility of using the chemical compound ammonia borane to store hydrogen. When heated, ammonia borane releases hydrogen gas that could, theoretically, be used in automotive fuel cells. PNNL scientists say an ammonia borane pellet weighing three-quarters of a gram can contain as much as 1.8 liters of hydrogen (for the metrically challenged, that’s about half a gallon). The range of fuel-cell cars currently under development by Ford (F), General Motors (GM), Honda (HMC) and Toyota (TM) is limited by the amount of hydrogen that can be stored in bulky on-board tanks. Pop in a handful of hydrogen pellets into a small onboard reactor that would control the release of hydrogen, the thinking goes, and your fuel-cell car would have the range and performance of a conventional vehicle. "It�s somewhat hypothetical but we think it’s something potentially doable," PNNL staff scientist Donald Camaioni told Green Wombat on Thursday. Presumbably such a reactor could also be used to generate electricty for home and commercial use as well.

The research is in its earliest stages, and the prospect of a hydrogen-pellet powered car is many years away, if ever. Camaioni says he and his colleagues have managed to release hydrogen from ammonia borane in the laboratory but two big challenges need to be overcome. One is figuring out how to control the release of hydrogen from ammonia borane through varying the temperature of a reactor. The other is to develop a system that can reprocess the spent pellets for reuse. "Right now there isn�t a well known way to do that cost- effectively, he says. Of course, if a hydrogen-pellet fueled vehicle is to be a carbon-free car, a no-emissions way of powering the reactor must be found as well.

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photo:  squiddphoto
The Tesla Roadster hits the highway later this month for the electric sports car’s first public road trip, a 200-mile journey from San Francisco through the Sierras to Lake Tahoe. Sure, it’s a publicity stunt but one designed to demolish the perception that electric cars are short-range put-put mobiles more suited to suburban cul-de-sacs than the open road. As the Silicon Valley startup gears up for production of the zero-to-60-in-four super car this fall, it will use the final prototype of the Roadster for the August 29 road trip. The Global Hyatt hotel chain is sponsoring the event and the Roadster will stop at Hyatts in Sacramento and Incline Village, Nevada, on Lake Tahoe. Hyatt is considering installing charging stations at some properties – Tesla in May won a $561,000 grant from the state of California to develop charging stations that can be deployed at hotels. While this is the first public road trip for the Roadster, Tesla has put the $98,000 car through its paces during long-distance testing, says Tesla public relations director David Vespremi.

Green Wombat recently had an opportunity to take a ride in the Roadster with Vespremi while reporting a story on electric cars ("Have You Driven a Fjord Lately? in the August issue of Business 2.0). The test car is a "fusion red" prototype that screams sex and speed.  Vespremi – like other Tesla employees, he’s a gearhead – backs the Roadster out of the garage at Tesla’s Silicon Valley headquarters and turns onto a busy thoroughfare. We cruise at about 40 mph for a bit and then he punches the accelerator and the car shoots forward into the traffic. I�m pushed back into my leather seat,  subconsciously bracing for impact as we silently rocket straight toward a tractor trailer ahead.  David flicks the steering wheel and the car effortlessly swings around the truck and heads toward the entrance ramp to the 101. It�s rush hour and the metering lights are on. He hits the accelerator and we rocket up the ramp at 90 miles an hour, gliding around the traffic as we merge onto the freeway. Green Wombat briefly considers taking out a second mortgage and adding his name to the wait list. The drive back to San Francisco in the Zipcar Prius is anti-climatic, to say the least.

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