$200 Million for Electric Cars?

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Interest in alternative-technology vehicles is tremendous right now, largely because of the success of the Toyota Prius hybrid and oil prices that have climbed above $90 a barrel. So far, Toyota Motor (TM) and General Motors (GM) are backing gasoline-electric hybrids and playing down electric cars, while Renault (RENA) and Nissan Motor (NSANY) tilt toward all-electric cars.

A Plugged-In Network

One of the key differences between more traditional schemes and Agassi's is that he separates the battery from the vehicle. By using lithium-ion phosphate batteries that can be lifted out of a vehicle and replaced, he extends the range of the vehicles beyond the 100 miles that they can now go on a single electrical charge. He also eliminates the time it usually takes to recharge batteries.

The plan is to set up service stations that will pull out and replace the spent batteries in about the time required to fill a conventional car's tank with gasoline. The company's wireless network will tell drivers where they can get their batteries replaced when they're on the road. Stephan Dolezalek, who heads up VantagePoint's green investments, says one of the advantages of this system is that it turns vehicles and their batteries into a massive storage system for energy, solving one of the problems facing renewable-energy advocates.

Neither Agassi nor his investors would detail the status of negotiations with test-bed countries, but they say small countries with concentrated populations are the likeliest places for this business model to find acceptance. In locations like those—say, in Israel or Singapore, or in major metropolitan areas within larger countries—the concentration of drivers and the concerns about pollution make it plausible that Agassi could attain the scale of usage and build a network of service providers large enough to make the business work financially. London, for instance, has exempted electric vehicles from paying downtown congestion fees and also provides free electrical charging in parking lots.

Electric Ecosystem

One of the things in Agassi's favor is his deep knowledge of the tech industry. He was one of the technology visionaries at SAP and helped win wide adoption of an important new trend in software: the creation of reusable components that can be used by a whole industry to rapidly build complex new computer programs for corporations or governments. Now he's proposing a networking system that would be made of the same technology building blocks and would tie in other companies. "He's taking what has already happened in the software industry and creating a smart network and a whole business ecosystem," says Yvonne Genovese, a tech strategy analyst at market researcher Gartner (IT).

Agassi also stands to benefit from the fact that a lot of companies and investors are exploring different facets of electric transportation. Indeed, his own investors provide him with connections to a handful of potential strategic partners: VantagePoint has invested in Tesla Motors (BusinessWeek, 7/30/07) and BrightSource Energy, a utility-scale solar energy provider, and Israel Corp. has a stake in Chinese carmaker Chery Automobile. These potential synergies are among the attractions for investors as well. "It's not a build-it-all-yourself idea," says VantagePoint's Salzman.

Hamm is a senior writer for BusinessWeek in New York.