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Nearly 6 times as much as an average American spends on gasoline each year — that’s how much electric vehicle infrastructure startup Better Place expects the batteries it needs for its charging network will cost to buy over the next 2-3 years, according to an interview […]

Nearly 6 times as much as an average American spends on gasoline each year — that’s how much electric vehicle infrastructure startup Better Place expects the batteries it needs for its charging network will cost to buy over the next 2-3 years, according to an interview in the UK Guardian this week with Better Place Denmark chief Jens Moberg. Moberg says he doesn’t expect industry battery manufacturing costs to drop below €8,000 ($11,440) until after 2012, when higher production volumes could help lower costs.

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By now, you might be familiar with Better Place founder and CEO Shai Agassi’s plan: basically building out a network of charge points and “swap stations” for batteries, which will be owned by Better Place. Agassi often talks about modeling the business plan for this system after cell phone operators, but instead of building a network of cell towers and selling minutes, the startup aims to set up a network of charge and exchange spots and sell miles. In order to do that, however, it needs (among other things) to stock up on batteries for each customer — a hefty investment for a startup.

Better Place is working with manufacturers including A123Systems and AESC to develop batteries. French automaker Renault, which aims to supply about as many electric vehicles as the Danish market can buy when Better Place’s network kicks off there in 2011, has designed its plug-in sedan to work with Better Place’s swapping systems as part of its larger effort to remove the cost of the battery from the price tag for consumers.

Contrary to popular conception, Agassi said in an extensive Q&A last week with Knowledge@Wharton, his company isn’t leasing batteries, per se, an option that Renault’s partner, Nissan, has proposed for the upcoming electric LEAF sedan. “We as the operator, Better Place, remain forever the owner of the battery…We don’t lease batteries,” Agassi said. “We’re an organization that provides a service, which is unlimited driving at a price on a per mile basis. And we buy kilowatt hours and buy batteries to provide that kind of service through infrastructure.”

Down the road, Better Place’s operating divisions in local markets will be tasked with raising funds in order to purchase batteries and install them in cars, and also to acquire customers, the startup’s Chief Financial Officer, Charles Stonehill explained earlier this year. So if every driver behind the wheel of one of the “tens of thousands” of electric vehicles that Moberg said he expects to hit the Danish market each year from 2011 onward, signs up for a Better Place subscription, that translates to hundreds of millions of dollars worth of batteries as the network gets up and running — potentially a sweet deal for battery suppliers if the scheme takes off.

  1. How factual, quoting a ‘study’ that doesn’t reveal what fuel price it was based on. At the time of the ‘study’ US gasoline was $2.00/gal, as a result of the lowest demand in 6 years.

    When US fuel returns to $3.00/gal as demand returns then it’s only 4 years worth. Based on current EU fuel costs of $8/gal it’s already less than 1.5 yrs worth, yet the battery will last minimum 10 years under warranty before it’s depth of charge reduces to 80% (meaning it is still more than usable beyond 10 years)

    Nissan say their pack will sell for $10k, same capacity, same car! The same size pack would cost $7500 based on BYD prices NOW, let alone in 3 years time!

    BTW what does it mater what Better Place say it costs if they are not ever going into the business of selling them?

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  2. Very Nice about information Automotive | Clean Power | Energy Storage | Green Building | Green IT | Policy | Smart GridBetter Place Batteries Expected to Cost Almost $12K Apiece.

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  3. The capital requirements of this business model are absurd, which is the reason they’ve only had success talking to governments so far (Israel etc.). They effectively want to replace the entire automotive industry with leased electric cars (or purchased cars and rented batteries). 100 million battery packs (one per U.S. household) at $10,000 each = $1 trillion! There simply isn’t that big a source of money in the world (including the public at large) that’ll invest in assets that degrade to worthless over 5-10 years, with the only return being how much you can convince people to overpay for the privilege of renting them back from you. Unless the business operates at very low margins, people will just buy their own battery packs rather than overpay.

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  4. Electric cars wont work until they come with a v8 soundtrack!

    that business model really is quite poor though like marco said.

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  5. We really need promote electric cars or items, too much of pollution out there. I really wish we all can have the dream to save our environment and make it better place to leave

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  6. marco has seen half of the problem to come. Its a vast pile of money to put in anything less than the highest possible return. just as the investment market is for all money these days. We have no place for this level of money being altruistically alloted. Its a claw vs fang mart.

    But I don’t think it works better for the car buyer to buy his own batteries either. Perhaps some hybrid finance, where the car sells, then the credit is extended the “middle man” etcetc to buy the batteries for that one extra customer.

    As for the scale of things bringing down the cost…..I fear its a pipe dream. Based not on the production costs, but on the raw material. The material found in western China and the Bolivian altoplano. And the “issues” that will inevitably come up.

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  7. [...] positive results.  The company just revealed that batteries for its swapping stations will cost almost $12,000 each, at least for the next few years until battery production ramps up.  In order to acquire enough [...]

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  8. [...] have positive results. The company just revealed that batteries for its swapping stations will cost almost $12,000 each, at least for the next few years until battery production ramps up. In order to acquire enough [...]

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  9. [...] have positive results. The company just revealed that batteries for its swapping stations will cost almost $12,000 each, at least for the next few years until battery production ramps up. In order to acquire enough [...]

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  10. [...] positive results.  The company just revealed that batteries for its swapping stations will cost almost $12,000 each, at least for the next few years until battery production ramps up.  In order to acquire enough [...]

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