Battery Swapping & Pay-Per-Mile to Speed Adoption of Electric Cars, Says Study

What happens when you take the cost of the battery — generally the most expensive part of an electric car — out of the sticker price for electric vehicles? That’s the question explored in a new study released this morning from UC Berkeley’s Center for Entrepreneurship and Technology. Economist Thomas Becker has modeled “adoption rates of electric vehicles with pay-per-mile service contracts” and switchable batteries — basically the Better Place model.

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But just as the Better Place survey we wrote about earlier this morning suggests a significant portion of drivers seem to think there are more electric vehicle options actually available today than there really are, it seems too early in the game to say electric vehicles will become competitive with conventional cars within the next few years based on mass deployment of Better Place’s swapping and mileage plans.

Becker finds that pay-per-mile service contracts and battery switching could deliver much faster adoption of EVs than previous studies suggest, with plug-ins making up as much as 64 percent of light vehicle sales and 24 percent of the total U.S. light vehicle fleet by 2030. In addition, he says the total cost of ownership could be 10-13 cents per mile lower for electric vehicles with financed batteries than for conventional cars by 2012 — depending on the cost of gas, if you factor in the $7,500 tax credit in place for EVs.

Becker sees ubiquitous swap stations as a key to ensuring “that a sufficient density of electric car infrastructure is deployed to extend the range of these vehicles” to the point of rivaling gas-powered cars. And he’s convinced that the best solution for making electric cars competitive with conventional vehicles is to separate vehicle ownership from the battery.

But does this really point to the Better Place swap station model? Not necessarily. Better Place’s model represents just one proposal among a growing number of strategies for selling mobility as a service (something I’ve written about more extensively on GigaOM Pro, subscription only).

General Motors and other auto companies have discussed battery leasing as an option for making plug-in models more competitive on the mass market, and Norway’s Think proposes to lease the batteries for its upcoming vehicles as part of a comprehensive “mobility pack.” For a monthly fee, drivers will get maintenance, replacement batteries, and (in some countries) electricity and insurance, all managed with an online interface.

So while Better Place has yet to convince most car companies to design plug-in vehicles with a standard battery pack located at the bottom of the car in order to be compatible with its automated battery swap system — and it faces a tough climb before reaching anything close to the scale Becker envisions in his forecast (especially in a global economic downturn) — Becker and Better Place founder Shai Agassi are onto something with the potential for innovative business models and battery financing to give EVs more of a competitive edge.

Yokohoma battery swap station photo credit Better Place

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