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A Plan to Wean Countries Off Oil, for $40 per Car

A Plan to Wean Countries Off Oil, for $40 per Car Better Place CEO Shai Agassi is aiming high in his goals to bring affordable, zero-emission, plug-in electric vehicles to the masses; although skeptics think it's more talk than action, there seems to be plenty of action taking place.

Shai Agassi has a deal for you.

Shai is the founder and CEO of Better Place, the audacious electric car startup based in Palo Alto, CA, that not only wants to change the way cars are powered but the way they are sold.

Here's his offer: Pay about $12,000 for a family-sized all-electric sedan made by Renault, known as the Fluence. Drive as much as you want. Pay $300 a month for all the electricity you need (or less if you drive fewer miles). Emit no CO2 or other pollutants. And help the world break its addiction to oil.

Sounds good, doesn't it?

There's just one catch: To get the deal, at least anytime soon, you'll have to move to Denmark or Israel -- where Better Place plans to launch in 2011.

The all-electric Renault Fluence Z.E.

The all-electric Renault Fluence Z.E.

Yesterday afternoon, I took a ride in the Renault Fluence Z.E. and sat down with Shai in Copenhagen, where Renault and Better Place have teamed up to offer test drives for the first time. Since Shai unveiled Better Place early in 2007, auto industry insiders have scoffed at his plans. He's a Silicon Valley guy, a former hotshot at software giant SAP, with no auto industry experience. A 41-year-old Israel-born enterpreneur, he has a lot of chutzpah and he can come across as glib. Skeptics say Better Place, like much of the electric car industry, is deliver more talk than action.

{related_content}But guess what? Better Place is starting to look very real. It's also starting to look like a big missed opportunity for the American automakers.

Better Place has already placed an order for 100,000 cars with Renault. Agassi plans to order another 100,000 cars in the first half of 2012.

I won't explain the Better Place business model here except to say that the company is a service provider, akin to a mobile phone company. Just as mobile phone companies discount their hardware and make money by selling minutes after building a network of towers, Better Place will build out a network infrastructure of charging stations and battery-switching facilities for its cars, sell the cars at or below cost and then make money by selling electricity. You will own the car, they will own and maintain the battery. Watch the video below if this is the first time you are reading about the company.

The economic model works, at least in theory, because electric cars are fundamentally more efficient and cheaper to operate than gas-powered ones. It works especially well in Europe where gas is heavily taxed and costs at least $7 a gallon. And it works best of all in Denmark, which imposes a whopping 200% taxes on new cars–so a car that retails for $20,000 sells for $60,000--that is waived for electric cars.

Denmark is also a good match for electric cars because so much of its electricity comes from renewable sources. As The New York Times recently reported:

Dong Energy, Better Place's partner and the biggest utility in Denmark, wants to power the anticipated fleet of electric cars with wind energy, which already supplies nearly 20 percent of the country's power.

With Better Place and the smart grid working together, cars would charge up as the winds blow at night, when power demand is lowest. Charging would soak up the utility's extra power and sharply shrink the carbon footprint of electric vehicles.

Better Place is also rolling out rapidly in Israel -- which wants to get its economy off oil for obvious reasons, and would love to see the rest of the world do the same. Agassi has agreements with governments to roll out Better Place in northern California, in the urban regions of Australia and in Hawaii. France, too, has made a major commitment to electric vehicles, one reason why Renault says it will launch four electric car models in the next several years.

Shai Agassi

Government backing for electric cars is crucial, just as government policy was needed to unleash private capital to create the Internet industry and mobile telephony. Today, Israeli President Shimon Peres was scheduled to hold a news conference today in Copenhagen to promote Better Place.

"What we've seen in Israel is that the president of the country wanted to get it done," Agassi said. "In Denmark, the minister of climate, Connie Hedegaard, said let's move forward, and they did."

By contrast, Agassi has run into dead ends in Detroit and Washington.

"Most car companies looked at us an anomaly," he says. "Not a competitor. Nor an ally. Because we're not a car company and we're not a supplier. In the car industry you're either a supplier or competitor. We're an enabler, but it's an industry that did not have enablers."

Besides, automakers had other things to worry about. "Most of these companies have gone through a massive, massive change," Agassi says. "Some of them have changed CEOs. Some of them have changed CEOs twice. Most of them have government cash infusions."

Still, he notes that Chrysler dropped its plans for an electric when it restructured after getting government aid. "How is that good for the taxpayer," he asks.

Agassi says the cost of building a network of charging stations and battery-switching facilities comes to no more than between $40 and $75 a car.

"At a cost of $40 per car in our country, we can get off oil," he says. "It's a crime not to do it."

Below are photos from Renault of the Fluence and the Kangoo, an electric van, as well as a couple of photos I took of a cute little single-seat EV for urban driving called the Twizy. Below the photos is the explanatory video about Better Place.

Renault Fluence EV

Renault Fluence EV

Renault Kangoo EV

Renault Kangoo EV

Renault Twizy concept car

Renault Twizy concept car

Renault Twizy concept car

Renault Twizy concept car Senior Writer Marc Gunther is a longtime journalist and speaker whose focus is business and sustainability. Marc maintains a blog at You can follow him on Twitter @marcGunther.

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