Better Place, by the Numbers

Better Place

Can Better Place, Shai Agassi's ambitious electric vehicle startup, actually create a viable alternative transportation infrastructure? Greentech Media attempted to answer the question with a dollars and cents breakdown of both Better Place and electric vehicles. Here, we try to simplify the issue even further.

  • Better Place has developed a battery-swap station that lets drivers to exchange their car's depleted battery pack for a full one in about three minutes. The more battery-swap stations are created, the less drivers will have range anxiety about taking an electric car for long distances.
  • Each exchange station will cost about $500,000, or half the price of a typical gas station.
  • The company will offer cell phone-like contracts to its customers, with battery packs leased from Better Place.
  • There are approximately 200 million drivers and 254 million vehicles in the U.S. Insurance companies claim that the average person drives 12,000 miles a year. So Better Place has 2.4 trillion miles, or $72 billion potential three-cent transactions each year.
  • A gasoline-powered car costs about 12 cents a mile to drive when gas costs $3 a gallon. Electricity costs approximately 3 cents a mile. That means Better Place has a margin of 3 cents per mile before people start complaining about the cost of powering up electric vehicles.
  • As lithium-ion battery prices decline, Better Place will have increased profit margins. Lithium-ion batteries now sell for $500 per kilowatt hour. When the price drops to $250 per kilowatt hour, Better Place's battery expenses drop to 3 cents a mile and the gross margin doubles.
  • One disadvantage: Not every car manufacturer is using the same batteries. So customers of, say, Ford, will be stuck charging their batteries in 240-volt outlets at home, while Nissan customers can use Better Place stations.
  • Better Place has a major competitor in Coulomb Technologies, which is rolling out curbside charging stations that customers can access with a prepaid plan. The major difference between the two companies: Coulomb doesn't offer batteries, so its charging stations are compatible with any type of EV.
  • Tesla is also planning to unveil its own battery swap stations for the Model S sedan.

So will Better Place prevail? That depends. If consumers decide that they are comfortable leasing batteries instead of buying them along with EVs and if more carmakers come around and use Better Place's battery model, then yes. But first Better Place has to educate American consumers on just why they should be comfortable leasing their car batteries from some strange California startup—a daunting task if ever there was one.

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