by George White
[Posted on October 29, 2007 - 5:30 PM]
E-mail
del.icio.us
Technorati
DiggEnergy startup Project Better Place launched Monday with $200 million in first-round funding to begin building a grid of recharge stations for electric cars.
The San Mateo, Calif., company received the capital from Israel Corp. of Tel Aviv, Morgan Stanley of New York and VantagePoint Venture Partners of San Bruno, Calif., as well as a group of 15 private investors managed by Michael Granoff. They include James Wolfensohn, Edgar Bronfman Sr. and Israel's Musea Ventures.
Believing the primary obstacle to widespread adoption of electric vehicles is a lack of easy and convenient places to recharge them, Project Better Place plans to establish a widespread grid of electric charging spots at current parking locations. With the ability to keep their cars charged and driving without the need to wait for electricity at any point, the company believes its grids are the practical solution to barriers to electric vehicle adoption.
"The secret is making it simple," said CEO and founder Shai Agassi, "where the consumer doesn't need to know the technology of how it works to use it."
In addition to Agassi, a former executive with SAP AG, Idan Ofer, chairman of Israel Corp., will serve as Project Better Place's chairman. Representatives from VantagePoint and Morgan Stanley will also take seats on the company's board of directors.
The company will use the initial funding for the first phase of the company's business plan to establish a repeatable framework of electric recharge grids through local operating companies. Agassi said the company's business model will mimic that of mobile phone operators. Just as a network of cell towers provides an area of mobile phone coverage, Project Better Place will establish a network of charging spots and battery exchange stations to provide ubiquitous access to electricity to power electric vehicles.
The company is in discussions with various governments to establish pilot sites and plans to begin rollout of the new infrastructure early in 2008.
"The intent in 2008 is to begin rolling it out on a beta level to integrate the cars with the charging units and the network and really learn how we're going to deploy this on a mass basis," Granoff said. "We don't need agreements with countries and others to have something on the ground in 2008."
The first rollouts will most likely be in Europe, said Ofer, where high oil prices have increased the incentives to buy an electric car. Although Project Better Place is started on a capital-intensive undertaking, the company doesn't expect to have to raise more financing soon, as its business plan calls for the actual capital for infrastructure to be raised locally.
How long the company's round lasts "depends on how quickly we deploy in the 15 different countries that we're talking to now," Ofer said. "Obviously the capital and project financing for the infrastructure will be raised in the individual countries in which we work in.
"We expect the capital to last a long time, because we already have such strong interest from different countries that we don't see any problems raising money for the local companies that we plan to create," he added.
Ofer said the company is in talks with parties in China, France, Israel, Japan, the U.S. and other countries. The framework of its business plan will be tested in launch markets over two years, after which it plans to deploy hundreds of thousands of vehicles annually across multiple markets. Project Better Place anticipates achieving tipping point saturation in early markets within 10 years of rollout.
Additionally, Project Better Place is in talks with carmakers and other companies that will be involved in the supply chain, including technology providers and global and local financing institutions.
Companies working on various models of vehicles include sports car makers Tesla Motors Inc. and Wrightspeed Inc., SUV maker Phoenix Motorcars Inc.; three-wheeled vehicle producer ZAP, Zenn Motor Co., Venture Vehicles Inc., Miles Automotive Group Ltd., Myers Motors LLC and Aptera Motors. Large manufacturers General Motors Corp. and Nissan Motor Co. have also committed publicly to coming out with electric cars.
Part of the company's plans to speed the adoption of electric cars involves partnering with car makers so that consumers who subscribe to Project Better Place's network can get subsidized vehicles, in the hope that with cars cheaper to buy and operate than fuel-based cars, electric cars will be a much more viable option.
Granoff estimates that the cost of recharging an electric car is "ten cents on the dollar compared with the cost of operating a gasoline car; how that will play out for the consumer will depend on what model is used."
How can I invest in this venture