Electric Car Business Model

Recently Wired profiled Shai Agassi and his company, Better Place.

The company is pushing electic cars and is working on a pilot rpogram in Israel and Denmark.  What makes things different is that he approaches is like the cell phone model. The plan is not to make money selling cars; it's to make money selling subscriptions to battery charging stations and battery swap facilities.

Speaking without notes, Agassi roams the stage, preaching the inevitability of his plan. He has a way of describing things that is never zero-sum; everybody wins in his version of the future, even when he's selling massive disruption.

"For the car companies, we made it simple," he says. "We separated the ownership of the car and the ownership of the battery. See, car companies don't know how to assess the life of the battery. So they go through these complicated programs of testing them for a long period of time. And we told the car company, you know what? Just like you don't sell a car with a card that says 'Here is oil for the life of the car,' you don't sell cars with the batteries for the life of the car, because the battery is crude oil." He explains that his plan alone, once scaled up, could produce a 20 percent drop in the world's CO₂emissions. And he wasn't stopping there. "If we also buy clean generation, we reduce the price of clean electrons so that at the end of 10 years, clean electrons are cheaper than coal-based electrons, and nobody builds another coal plant at that point. That's another 40 percent of CO₂ emissions; that's the treaty Tony Blair is now working to get for the world by 2050. I'm telling you, we can get there a decade after we finish the car side. We can get there in 2030—60 percent reduction in our CO₂ emissions."

It's a great story.  I don't know if it will work, but it is refreshing to see new, potentially plausible ideas and business models in this space.

You can read the whole article here.