agassi - AP - July 6 2011
Demoted Better Place CEO Shai Agassi giving one of the company's cars an electricity boost. Photo by AP
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The first electric cars in the Better Place system are due to arrive on Israel's roads in the next few days. The cars themselves are an electric version of the Renault Fluence: Instead of a gasoline engine, the car will be powered by a large battery. When the battery is used up, it will either be charged at a charging station or quickly replaced with a full battery at a special battery-swapping station.

Better Place's electric car network was supposed to bring us glad tidings of an innovative high technology that would preserve the atmosphere and the environment, redeem us from our dependence on oil and, above all, save us money.

But it is very doubtful that the electric car will indeed reduce emissions of greenhouse gases in Israel. And now that the full costs and the technical specifications have been revealed, there are equally serious questions about how much consumers will save.

First, there's the price of the car. The electric car will cost NIS 123,000, slightly more than a regular Renault Fluence. That's the price that was set, even though purchase tax on the electric car will be only 10 percent instead of 70 percent. In other words, the main beneficiary of the huge tax break Better Place obtained from the state, which amounts to some NIS 70,000 per car, will be Better Place itself.

Second is the price of the energy. The minimum package that Better Place is offering its customers covers charging or replacing batteries for up to 20,000 kilometers worth of travel a year, at a cost of NIS 13,000. On its website, Better Place compares this to the cost of the gasoline an ordinary family car would use in traveling the same distance (about NIS 14,700 ) and gives itself a big pat on the back.

The problem is that Better Place's calculations display a troubling resemblance to the pricing tricks employed by the cell phone companies. It turns out the the average private car in Israel travels 16,700 kilometers a year. But the minimum package that Better Place customers will have to buy - for once they have bought the electric car, they will have no choice - is for "up to 20,000." And just like the cell phone companies, which never return a single cent for unused portions of a package, Better Place, too, will presumably not refund the change from unused kilometers.

If you compare the cost of going 16,700 kilometers in a regular family car, you will discover that this car's owner spends NIS 1,000 less on gas than the cost of the Better Place package. And comparisons with hybrid cars are even more problematic: The gas the average hybrid car uses to travel 16,700 kilometers costs from NIS 5,000 to NIS 8,000 less than Better Place's minimum package.

And here's another outrageous fact: According to Better Place's own data, the amount of electricity it will buy from the Israel Electric Corporation in order to power one car for 20,000 kilometers is 2,600 kilowatt-hours. At current electricity prices, this quantity of power costs NIS 1,300. So why is Better Place demanding 10 times that sum from its customers? Granted, it invested time and money in developing and setting up the charging system, but 10 times the actual cost? What is this, cottage cheese?

The contempt Better Place is demonstrating for the Israeli consumer will presumably greatly reduce the number of electric cars sold here, but it's not clear the company cares. Indeed, it's not inconceivable that the electric car is just a gimmick. The big money for Better Place lies in the monopoly it received from the state on building and operating charging stations.

This monopoly - which turns any car manufacturer that might ever bring an electric car to Israel, as well as its customers, into a captive audience - is worth pure gold.