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Tuesday, 17 June 2008

Israel backs Palo Alto man's electric car plan

SAN FRANCISCO CHRONICLE : Tuesday, June 17, 2008

Tel Aviv -- Shai Agassi, a Silicon Valley entrepreneur, pledges that he can beat the spiraling cost of gasoline with the world's first mass-produced electric car.

In January, Israel's government endorsed the Palo Alto businessman's ambitious joint venture between his startup company - Project Better Place - and Renault-Nissan.

Agassi says he raised $200 million to get the $500 million dollar project, which will include a network of charging and battery-exchange stations by 2010, off the ground.

Project Better Place also has signed an agreement with Denmark to begin a similar operation by 2011. In Denmark, a pioneer in developing wind power, batteries are expected to be recharged using wind-powered turbines.

Agassi, a 39-year-old Israeli, co-founded Project Better Place after he quit his post in 2007 as president of the products and technology group for the German software giant SAP AG. Although some insiders say he left after losing out in a power struggle to become SAP's chief executive, Agassi says he left to focus on "issues that are important to me," including alternative energy and the future of Israel.

140 miles on a charge

Agassi is banking on his electric-powered sedan revolutionizing life on the roads, cleaning up the environment and reducing dependence on oil. The cars are expected to have a range of up to 140 miles per charge and a top speed of 68 mph - the speed limit in Israel.

Last month, he invited reporters to test-drive a prototype that looks a lot like the Renault Megane, a four-door sedan. The car is noticeably quiet and has no exhaust pipe, an electric socket in place of a gas cap and a dashboard gauge that measures the charge of the vehicle's 450-pound lithium-ion battery.

In the United States, Hawaii Gov. Linda Lingle has said she is interested in her state becoming the first to embrace the electric-car network. Mayor Gavin Newsom also has reportedly expressed interest in making San Francisco the first U.S. metropolis to place electric cars on city roads.

Agassi said that because most rides are less than 100 miles, drivers can recharge batteries at home, at work or at thousands of charging points throughout Israel. On longer trips, they can exchange batteries in a five-minute operation at about 200 "swap stations."

"We have a second battery for every driver in the swap stations. It's waiting for you in case you need it. You don't need to carry it with you in the trunk," Agassi said.

Moreover, Nissan's global product planning chief, Tom Lane, has said his firm will soon announce a battery breakthrough, one that could increase driving range to around 200 miles per charge while recharging in as little as 20 minutes.

The cars are also expected to be more economical than a typical gas-driven sedan due in part to tax breaks from the Israeli and Danish governments. Agassi also says the development of the lithium-ion battery has significantly lowered the cost of electricity at a time when oil prices are soaring. Gas currently costs $10 a gallon in Israel and more than $8 a gallon in Denmark.

"Within a decade, the cost of energy for a single year of fuel supply for a combustion car should cost more than the cost of energy for an electric car's entire life, even when taking the cost of battery into consideration," Agassi said.

As with cellular phones, where the service providers install an infrastructure that allows users to make calls and send text, Project Better Place plans to charge $550 a month and provide 18,000 miles a year for the use of the batteries and charging and swap stations. The customer doesn't own the battery - the cars are designed to have easily removable battery packs that can be exchanged.

'Another nutty idea'

But not everyone is convinced that electric cars are the answer.

Jerry Flint, automotive analyst at Forbes magazine, wrote that the project looks like "another nutty idea. Electric cars have limited range and take a good while to recharge. I am still skeptical about how quickly manufacturers will solve the lithium-ion batteries' problems, such as overheating, and be able to put the batteries into mass production."

Nevertheless, the project has won the endorsement of Israeli President Shimon Peres and Idan Ofer, chairman of Israel Corp., one of the nation's major industrial conglomerates, who has invested $130 million in the program.

"I consider this to be a revolutionary project, and I believe that most of the public will drive an electric car within a decade," Ofer said.

Meanwhile, Agassi said he will continue driving his customized electric Toyota RAV4 EV - one of only 1,000 - on Northern California roads.

"I wish I had a battery swap station where I can drive to. We don't, so I manage my energy," he said. "It's one of the most fun cars I've ever driven, because every time I go by a gas station, I feel like I cheated."

The man behind battery-swap plan

Shai Agassi, 39, is an Israeli software entrepreneur who founded TopTier Software in Israel in 1992. He later moved the company's headquarters to Northern California.

In 2007, he co-founded the startup Project Better Place after he quit his job as top executive at the German software giant SAP AG.

Project Better Place wants to produce electric cars as an alternative to current fossil fuel technology.

The automobile that could revolutionize Israel - Denmark could be next

For the most part, foreign automakers - including Nissan-Renault, BMW, Audi, Mitsubishi and Subaru - are developing electric cars to meet California's zero-emission vehicle mandate, which requires at least 7,500 electric or hydrogen fuel cell vehicles on state roads by 2014.

In the United States, electric vehicles are not a large part of U.S. automakers' plans - for the time being. And mileage per charge is not high. But in Israel, the joint-venture Nissan-Renault/Project Better Place electric car is expected to have a range of 140 miles per charge. For longer drives, motorists will be able to replace the battery at about 200 swap stations to be built throughout Israel by 2010.

Project Better Place also has signed an agreement with Denmark to begin a similar operation by 2011. Both the Israeli and Danish governments have agreed to provide tax incentives to stimulate the program.

U.S. explorations into the electric car arena include:

Chevrolet Volt: The Volt's plug-in batteries will handle around 40 miles, enough for a daily commute; the car can switch to gas power for longer drives. The Volt, which is expected to be available by the end of 2010, is the centerpiece of General Motors' push to develop alternative-fuel vehicles.

Tesla Motors: The San Carlos company makes an electric sports car that can do 0 to 60 mph in 3.9 seconds. The nearly $100,000 car can be plugged into a standard wall socket for six to seven hours. Or drivers can use a recharging station designed by Tesla installed in their garage.

E-mail Matthew Kalman at foreign@sfchronicle.com.

This article appeared on page A - 1 of the San Francisco Chronicle

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