The key player in the global electric vehicle market is China — everyone from Ford Chairman Bill Ford to Warren Buffett and Bill Gates, have repeated the mantra — and for an electric vehicle infrastructure and services player like Better Place, the country could be a crucial breakthrough. This weekend Better Place announced that it has struck a partnership with Chinese car maker Chery to collaborate on electric vehicle technology.
While the deal is light on specifics, Better Place says part of the signed “memorandum of understanding” is that Chery and Better Place will develop electric vehicle prototypes with switchable-batteries and will seek to work with the Chinese government on electric vehicle pilot projects. The companies will also be showing off early stages of this technology with one of Chery’s Riich G5 sedan’s at an upcoming car conference in Beijing. (To hear more from Better Place, come to our Green:Net conference on April 29 in San Francisco).
Better Place’s electric vehicle infrastructure and services business is based around battery swap stations, where customers that pay a subscription fee can swap out used batteries for fully-charged ones. The idea is that most of the time Better Place customers will be able to charge vehicles around town at charging stations but when they want to take a longer trip, and not wait for charging, they can use a battery swap station. Better Place plans to sell electric vehicle service like cell phone minutes, with subsidized vehicles and customers will pay for the service.
But part of making that model a success is convincing car makers to make vehicles that have swappable batteries. That’s why if the partnership with Chery turns into anything substantial (produces a real commercial product) it could be significant. French-Japanese auto duo Renault-Nissan has so far been Better Place’s flagship car maker partner, but most car makers in the U.S. have been hesitant to partner with the startup.
Of course Better Place isn’t alone in looking to tackle the Chinese EV market. Better Place partner Renault-Nissan has its own electric vehicle development and infrastructure plan and already has a deal with Chinese city Wuhan to develop electric vehicles and infrastructure. Under that pilot program, Nissan will roll out 25 electric vehicles in Wuhan starting in 2011 with the Nissan LEAF sedan and the Wuhan government will build 250 electric vehicle chargers, and two additional “quick chargers,” for installation in the city.
Auto companies, and startups are hoping to get a slice of the Chinese electric vehicle market for several reasons. The car market in China will soon be massive — an estimated $220 billion by 2030, according to McKinsey. The Chinese car market is also new, dominated by first time buyers, and unlike in the U.S., isn’t shaped by decades of buying gas-powered cars, so could be more willing to buy hybrids and electric vehicles. Frost & Sullivan estimates that hybrid cars will be truly mass-market in China by 2011 or 2012. The Chinese government, meanwhile, has thrown its weight behind electric vehicles, aiming to make the country the world’s leading producer of EVs and eventually also electric buses.
Better Place has found some early success in making deals with a couple of small, uniquely-suited, locations, including Israel, Denmark and Hawaii. But those deployments have just started, so who knows how the business model will fare in the coming years when the service is actually widely available to customers. Better Place has also not made much traction in large, sprawling markets, particularly in the U.S., and it remains to be seen if the model would be able to gain traction with China’s growing population of vehicle owners.
For more research on electric vehicles check out GigaOM Pro:
Photo courtesy Flickr user Hong Kong dear Edward.