The U.S. has no shortage of government and private funding for electric car innovations and charging networks. But it’s missing one thing that can really make it a big electric car market: expensive gasoline. At least that’s the main reason why Better Place will be using the majority of its recently-announced $200 million round on building its business in Western Europe, said Andrey Zarur, a board member of Better Place.
“Western Europe has the highest average price for gasoline, and we can provide services at a relative low cost. That is where Better Place sees the low hanging fruit for deploying our solutions,” said Zarur during a conference call with reporters Thursday.
Aside from Denmark, where the startup has been working with the country’s state-owned utility for several years now and plans to finally launch a commercial service this year, Better Place wants to offer services in other European countries such as France and the United Kingdom.
Indeed, after proselytizing the value of battery swapping on several continents, the Silicon Valley startup decides that the best place to make money is also where small, more fuel efficient cars have long gained wide acceptance because governments impose heavy taxes on fuels.
Remember back in 2008 when gasoline prices climbed passed $4 per gallon in the U.S. for the first time ever? Prices went up in Europe, too, and in France gasoline and diesel were fetching more than $8 per gallon, according to this Time magazine article. In the U.K., diesel cost more than $11 per gallon. The U.S. federal and state taxes accounted for 11 percent of the retail gasoline price back then while taxes in France and the U.K. made up around 70 percent. Fuel prices remain much higher in Europe than in the U.S. today.
Europe, incidentally, also has made a stronger, across-the-board commitment to reduce greenhouse gas emissions, something that the U.S. lawmakers can’t agree on.
Many electric car advocates have said gasoline prices will only go up over the long term and that will help nudge consumers away from vehicles that run on fossil fuels. But that argument doesn’t translate into a good sales pitch to sell consumers electric cars right now. Telling drivers that they should put up a big upfront cost for electric cars so that they can reap fuel savings later also isn’t compelling. So in addition to fuel prices, car prices also will have to come down quite a bit for consumers, particularly those in the U.S., to buy electric cars.
This magical combination of high fuel prices and lower car prices doesn’t exist in the U.S. now, and that means not much money can be made for car makers, battery manufactures, charging station owners and other related technology and service providers. It also means that companies such as Tesla Motors and Fisker Automotive will not break out of its niche of serving the well to do for some time.
The Chevy Volt and Nissan LEAF are not meant of mass adoption either, Zarur. The Volt has the long range thanks to its gasoline engine, but it’s more expensive. The LEAF is cheaper but Zarur doesn’t think its driving range is long enough nor is it roomy enough as a family car.
“We are after suburbanites, the commuters, the 20-30,000 miles a year drivers, people who take kids to soccer, go work and from time to time take a road trip where they drive 300 miles in a day,” Zarur said. This market “only accounts for 25 percent of the total drivers, but it accounts for 50 percent of the gasoline use. That’s where we have the most impact as a business.”

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