Chicago (IL) – The Hawaiian Electric company and the State of Hawaii endorsed an effort to build an alternative transportation system based on the concept of electric vehicles with swappable batteries and a “smart” battery charging network on Tuesday.
Shai Agassi, a former Silicon Valley Software Executive, is the brains behind the operation. Agassi plans to conquer all of the issues concerned with electric vehicles such as slowed battery charging, and the limited production and availability of the vehicles themselves. By utilizing electric vehicle technologies that already exist and pairing them with an Internet connected network of tens of thousands of recharging stations, Agassi believes that his company Better Place, headquartered in Palo Alto, California, can make the dream of all-electric vehicles a reality.
The Hawaii announcement comes after endorsements from Australia, Israel, Renault-Nissan, Denmark, and a coalition of Northern California localities that support the concept of all electric vehicles with a range greater than 100 miles, beginning at the end of 2010 in Israel. Deployment of the vehicles will begin in 2009 on a test basis, and begin to sell on a commercial level in 2012.
To date, Agassi has raised $200 million in private financing for his concept. In October, the Macquarie Capital Group committed to raising an additional $1 billion for a project in Australia.
Even though the credit market is weak, Agassi still has hope – which lies in the fact that his network is capable of providing investors with an annuity. Individuals who subscribe to the recharging network would be required to pay for access and the miles they drive. However, given the negative state of the mortgage market, Agassi said that investors are currently seeking new types of assets that will better suit them financially. Investors need more reliable streams of income that pay out over many years.
Agassi’s argument has been that if the price of oil continues to decline, then his electric recharging network (ideally run off of solar and wind power) would be able to provide energy at a competitive price for a completely new vehicle class.
He believes that his network idea will be most appropriate for “island” economies, since their energy costs are typically higher. As the network is scaled up it will begin to become more cost-competitive.
Hawaii is a small market, with high energy costs. Currently the state has 1.2 million cars and citizens are replacing between 70,000 and 120,000 vehicles each year. Typically, island drivers do not make trips over distances of more than 100 miles, which means that there won’t be as great a need for battery recharging stations. A major factor in Agassi’s model is the quick-change service stations that will aid drivers who need to drive their before they have time to fully recharge the battery.
In the latter part of November, the mayors of San Francisco and other Bay Area cities endorsed the Better Place network to help them in the creation of an electric recharging network by 2012. The company estimated that it will cost $1 billion to build a Bay area a charging network with nearly 500,000 charging stations.