Project Better Place and Renault-Nissan Charge Ahead in Israel

Shai Agassi’s electric vehicle infrastructure venture Project Better Place announced on Monday that it will build its first pilot electric battery rechargeable grid system in Israel, and has partnered with the Renault-Nissan Alliance on the project’s electric vehicles. There were some rumors about the deal being announced today, and this morning we watched a major press conference featuring the Prime Minister of Israel, Ehud Olmert, Renault-Nissan CEO Carlos Ghosn, and Project Better Place CEO Shai Agassi.
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Project Better Place, which has raised at least $2300 million (see update below) from investors Israel Corp, Ofer Shipping Holdings, Morgan Stanley, VantagePoint Venture Partners, and private investors, will build 500,000 charging spots across Israel, with vehicles available in 2011. A Project Better Place spokesperson tells us that the Israeli project will cost an initial $200 million, and eventually $1 billion by the time the project is complete.

The company says Israel is a good fit for the pilot network because 90% of Israeli car owners drive less than 70 kilometers per day, as well as the fact that urban areas are less than 150 kilometers apart. It’s also a good match because the state of Israel recently extended a tax incentive on the purchase of any “zero-emissions vehicle” until 2019.

The major question is whether Project Better Place will be able to recreate the model in other places where Agassi is less connected, as well as places with less convenient urban designs. (Like the sprawling parts of the U.S.)

In his speech Agassi called the government’s participation a “model of public-private partnership that I believe the rest of world will follow,” (he posted the speech on his blog.) In Prime Minister Olmert’s speech he referred to Agassi as the boy in the ‘Emperor has no clothes’ tale, and expressed his fondness for the former SAP exec and Israeli entrepreneur (Agassi is a dual citizen of Israel and the U.S.)

Agassi also explained that a year ago the Prime Minister promised state support if the startup could find outside funding (as the Israeli government wouldn’t fund it), along with support from a car company to build electric cars on a mass scale for the project. With this announcement it’s clear that Agassi has secured both.

While we were a bit skeptical that Agassi’s lack of experience in the energy and auto industries could hamper the venture, perhaps his strong political connections were actually more important when it came to getting this first pilot infrastructure deal. Though we’ll see if the entrepreneur’s connections extend to other states and countries.

Renault-Nissan will supply the electric vehicles for the project, which will be equipped with lithium-ion batteries (see our EV Battery Primer). Nissan’s joint venture with NEC, will produce the battery pack. Reuters quotes Renault-Nissan CEO Ghosan as saying the vehicles will have a range of “100 km in city driving and up to 160 km on the highway,” and “will accelerate from zero to 100 kph in 13 seconds.”

As we explained in earlier posts about the startup, the company’s business model will be similar to cell phone subscriptions and vehicle owners will be linked into a nationwide network of charging spots and exchange stations. When a driver travels long-distances, he or she can swap batteries at an exchange station to get a fully charged battery, similar to how we stop to fill our gas tanks today. An on-board computer system will display the remaining power supply and the nearest charging spot.

It will be interesting to see if the high costs of gas will convince Israelis to sign up for the plan. The startup says it will offer several car models and subscription pricing packages, and will subsidize the car as part of the package, bringing down the total cost of ownership.

You also might be wondering how the project’s electric vehicles can be claimed “zero emissions,” considering they will be powered by electricity, which is most commonly created through fossil fuel-powered plants. But Agassi said in his speech that the infrastructure will be powered by “batteries, that get their energy from green sustainable electricity sources.” We’re thinking that means mostly solar, given Israel’s tradition of a strong solar industry.

While this announcement is a significant step for the future of electric vehicles, we’re not sure we would go as far as Agassi does when he says he took inspiration from Kennedy’s attempts to put a man on the moon. Ultimately we’ll see if Project Better Place can get deals in not-so-perfect locales, too. If it can, only then we might consider it a small step for man.

(Update: The additional $30 million in investment from Ofer Shipping, was part of the original $200 million.)

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