Israel: Cradle of the Electric Car

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The country imports 10 million tons of oil and 12 million tons of coal annually at a price tag of more than $6 billion.

Of course, while the cars themselves will be free of greenhouse gas emissions, producing the electricity to power them will not. Virtually all of Israel's electricity comes from coal and natural gas plants, so in the first few years, the electric car project would indirectly produce greenhouse gas emissions. Agassi says he hopes eventually to purchase electricity from renewable energy sources. In fact, Israel has a policy in place to produce 10% of its electricity from solar and wind by 2020.

Opportunity for Entrepreneurs

Earlier this month, the Tel Aviv Municipality announced it was joining Agassi's venture. Deputy Mayor Pe'er Wisner said the city would launch a pilot scheme of charging-points for electric cars set up around Tel Aviv. From an initial launch of five, the city plans a network of 150 charging-points at municipal parking lots, outside public buildings, and along city streets. Battery replacement stations would be set up at the entrances to Tel Aviv.

Israel's high-tech industry also hopes to play an important role. "There are a lot of entrepreneurs looking to jump on the bandwagon," says Jack Levy, founder and managing partner at Israel Cleantech Ventures, a Tel Aviv venture fund that has a small stake in Project Better Place. He believes Israel has a lot of knowhow to offer—from academia and the military—in fuel cell and battery technologies. While Renault-Nissan has no plans to manufacture cars in Israel, it will be opening a local research and development center to focus on technologies for the electric car.

Even though Israel is only a blip in the world's car market, Agassi's dream is to turn the country into a global trendsetter. He will have his work cut out for him, though—first in proving the electric car idea can work, then selling the idea to Israelis, who are just beginning to show an interest in the environment.

Sandler is a correspondent for BusinessWeek in Jerusalem .