Shai Agassi launches electric car grid project
There is nothing trendier than global warming, and there is nothing that global business leaders like more than spearheading a trend. That is what Israeli entrepreneurs Shai Agassi and Idan Ofer are doing, as they explained at a press conference in New York yesterday called to present their idea for reducing the pollution of our planet.
While the pundits tear out their hair and politicians wrangle, Shai Agassi (the Israeli hi-tech star once short-listed to become chief executive of the German software giant SAP) and Idan Ofer (son of Sammy and chairman of the sprawling holding firm The Israel Corporation) are acting. They are targeting what some say is our planet's number one polluter: cars. Some 700 million of them travel the globe, emitting 2.8 billion tons of carbon dioxide each year, and the situation is not likely to improve any time soon. Unless, of course, Agassi and Ofer have their way.
Interestingly, The Israel Corporation, which Ofer controls, also owns a controlling interest in Israel's biggest oil refinery, in Haifa.
Their idea is to shift the world's drivers from fossil fuel-powered vehicles to electric ones. No, they won't be building electric cars: They believe that Big Car can do that. Their idea is to seed the earth with stations to charge the batteries that drive the cars, making it convenient for drivers to "pull over for a charge." In a word, to make a grid.
The idea of an electric car is not new, and the carmakers and Big Oil have scuttled it before. But the two Israelis, who are working via a joint venture with the extraordinary name of "Better Place Project," believe that the dwindling supply of fossil fuel and the mounting filth coating the planet and fouling the air leave opponents no choice but to accept. Agassi and Ofer say they are in talks with a battery maker that would handle production.
They do not just talk, these two: They also put their money where their mouths are. The Israel Corporation put up half of the venture's $200 million in financing, and Idan Ofer therefore chairs the startup. The other half came from a group of investors including the Morgan Stanley investment firm. One of the private investors in the group is former World Bank president James Wolfensohn.
By all criteria, starting capital of $200 million is respectable. But it is insignificant compared with the magnitude of the revolution that the entrepreneurs hope to provoke. Certainly, they have managed to convince top-tier members of the world financial community of the seriousness of their intentions.
Agassi and Ofer explain that their business model is like that of a cellular network. What cellular service providers do is seed the territory in which they work with transponders (antennas). Better Place would scatter charging stations throughout the countries that choose to join the ambitious project. Moreover, it would work together with local entrepreneurs in each area, and would also cooperate with car manufacturers, battery makers and private entrepreneurs. Money for the project's various aspects would come from the private sector, not government sources, the entrepreneurs said.
At this stage, Ofer and Agassi refuse to suggest where they might conduct their pilot. Agassi expects to start the test phase early next year, he said, and hopes to have several thousand car subscribers by 2009. He foresees the project exploding in 2010, by which time the venture should achieve full deployment in certain countries.
In general, the two are confident that building an electric car is only a matter of time. However, they believe that their venture will substantially expedite the process.
If Agassi and Ofer decide to launch operations from Israel, they could get tax breaks, said government sources in the know about the project.
But government sources who have talked with Agassi said that he has not provided any figures on economic feasibility or even produced a concrete business plan predicting total investment, future sales and potential profit. It is still an idea in a briefcase: There is no technology and not enough financing in place. He is keeping top officials in the loop, so if the need for government support arises, they won't present obstacles.