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.
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.