It seems the collapse of Better Place hasn’t spelled the end of electric-car development in Israel. In the industrial zone of Lod, some 30 engineers and others are earnestly engaged in developing the technology for propelling cars on the basis of aluminum and water.

Their company, Phinergy, is already testing two cars converted in The Netherlands to electric propulsion. The first is a Volkswagen Caddy commercial van that was given a 200-horsepower electric motor and the second is a subcompact Citroen C1, which serves as the company's demo car.

"When they first showed me the system it looked too good to be true," says CEO Aviv Tzidon, an investor and entrepreneur. "I started investing money and we started testing. We found a solution for every problem that cropped up, and after a year I understood we have something real in hand."

It might not sound right, but an electric engine is actually quite suitable for a car. It can generate plenty of power and deliver torque immediately upon pressing down on the pedal – and not at high RPM like an internal combustion engine. It is more compact in size and cheaper to maintain. In fact, it has only one not-so-small problem: a deficient energy supply.

Electric motors can power anything connected to a wire – from a kitchen mixer to a locomotive – but electric engine designers for road vehicles are faced with a dilemma: Electric cars have too short a range. Electric cars sold on the market today can't travel more than 120 kilometers under normal conditions due in part to carrying at least 300 kilograms in battery weight. Afterwards they require eight hours to recharge.

With stats like these, electric cars can't serve as a routine form of transportation and certainly can't compete with gasoline-operated cars. Various companies are first trying to attack the problem of range. Better Place tried offering a roadside battery-switching service. Carmakers like General Motors and BMW install a small gasoline engine that pollutes but serves as a generator to extend the range of their cars.

Phinergy relies on technology developed by Bar-Ilan University's Prof. Arie Zaban. It is trying to change the base on which the battery itself operates through the contact of aluminum with oxygen and water.

The idea of releasing energy contained within metal such as aluminum or zinc isn't new, but in the past nobody succeeded in developing a system that could utilize this energy efficiently or over any extended time. Zaban has apparently solved the problem with the help of nanotechnology.

But why aluminum, a metal considered quite expensive? "Aluminum is very common in the earth's crust, comprising 8% of it," explains Zaban. "Today there is even overproduction of aluminum in the world. The prices aren't high. A kilogram of aluminum costing $1.80 produces eight kilowatt/hours of electricity. One kilometer driven by a car would cost just 20 agorot, much less than the cost of gasoline."

Battery recharging every 61 kilometers

Zaban began working on his development in 2000, and three years later Eric Khasin joined the team. Two years later they managed to prove that the process works, although only on a small scale, and switched to a platform that could produce the facilities in commercial quantities. Here's where Tzidon stepped into the picture.

Until now $15 million has been invested in the company – partly from Tzidon as well as from brothers Michael and Yuval Golan and from French technology consulting company Alten. Additional funding was provided by the Chief Scientist's Office of the Energy and Water Resources Ministry to allow the company to build its demo car.

Zaban hasn't any stock in the company but is still expected to share in the profits from the invention if and when they appear. "This is an extraordinary transfer of knowledge between the academic world and the private market," he says. "Chemical research can turn into something that everyone will be using in the future."

As a car, this isn't a masterpiece. Its engine is weak, the brakes aren't calibrated for the car's excessive weight, and handling of the small Citroen is sluggish and tricky due to its ponderous battery. However, the mechanism for extending its driving distance causes some wonder.

We set out on a 61-kilometer journey with a regular battery made of lithium. Within just 10 kms we discover the range has dropped to 42 km and start to worry about being able to reach our destination. We stop a moment to fill the extended range mechanism with water. At this point the lithium battery begins to recharge and the range starts climbing.

The water tank provides enough for a 330-km trip, according to experiments conducted by Phinergy, and it can be filled quickly. The aluminum block itself contains enough energy for 1,000 km of driving. But the recharging is very slow and on a long trip there will probably be a need to stop a bit and wait for the lithium battery to fill up. However, a mechanism can be produced that will create a stronger charge and fill the battery more quickly.

"The charging will be administered by computer," says Tzidon. "You can key in your destination and the computer will plan the flow of electricity from the aluminum to the car's battery."

Most trips don't require extended range anyhow, he points out, and the small lithium battery charged from a household electrical outlet should be enough for the daily commute to work.

The aluminum mechanism is for extending the range for excursions and special trips, but most are planned ahead. Tzidon says the aluminum can be replaced once a year, like the brake linings, in routine maintenance. This, he claims, is how carmakers for the first time will be able to also provide customers with energy.

Renault is already experimenting

One carmaker is already expressing interest in Phinergy's technology: none other than Renault, the French manufacturer that got involved in the Better Place misadventure. Renault has come out with an electric super-mini, the Zoe, and the company is experimenting on it with Phinergy's range-extending system. The system could reach regular production by 2017, according to Tzidon.

Asked if Renault wasn't worried about trying out Israeli electric propulsion technology after getting burned by Better Place, Tzidon replies, "What Better Place did was something big, perhaps ahead of its time. They convinced world public opinion that electric cars are the future, and that battery switching technology was good."

Tzidon says Renault wasn't concerned about working with Phinergy, as the company offers technology that will be produced and marketed by the manufacturer rather than as a service like Better Place. Phinergy has another important collaboration – with U.S. aluminum giant Alcoa for providing aluminum panels.

If Phinergy's technology can be proven on a commercial basis and aluminum can really be made readily available and cheap, the company might be holding the Holy Grail of the energy-storage industry: the ability to generate electricity quickly, without pollution, and extend battery life for cars and for other devices as well.

Perhaps Israel will be the source of glad tidings for the electric car industry after all.