Supplying the Brains for Electric Cars

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An EV That's Competitive in Price

In Frankfurt, the data communications system is being demonstrated in conjunction with Renault (RENA.PA), which plans on supplying cars for Better Place's Israel and Denmark projects. The in-dashboard piece of the system is installed in one of four EV concept vehicles that Renault is unveiling at the show—a full-size sedan. Renault predicts that its electric vehicles, which will go on sale in 2011 and 2012, will cost about the same as a comparable gasoline-powered vehicle, and that the cost of operating them will be equal to or less than that of gas-powered vehicles. Two of the four models will use Better Place batteries and work with its system, according to a Renault spokesperson.

The concept car that will be part of the Renault and Better Place demo in Frankfurt is the Fluence ZE, a five-seat-sedan. Better Place will begin importing and selling the car in the first half of 2011 in Israel and will offer subscriptions to customers buying this car from the Renault network in Denmark. The two companies are committing to a volume of at least 100,000 vehicles for both countries by 2016.

Agassi calls his technology the "information train" for operating electric vehicles—in contrast to the mechanical "drivetrain." Software and electronic gadgetry will be installed in auto dashboards to manage navigation and track the vehicle's location. Software installed at Better Place's command centers will learn from a driver's behavior and use that information to predict future driving patterns. A key element is managing the use of electricity for charging batteries in charging stations and vehicles to smooth out the impact on the electrical grid. Better Place will charge a monthly subscription for the service.

Rather than inventing all of the technology itself, Better Place formed partnerships with chipmaker Intel, software maker Microsoft, and electronics manufacturer Flextronics (FLEX) to provide key components. It's using software packages from SAP and Amdocs (DOX) to manage accounting and billing. Microsoft supplies a computer operating system for the in-dash system. "We view electric cars as roaming consumer electronic devices, which have the potential to move from niche product to mainstream, and we're delighted that Better Place is using Microsoft technology," says John Fikany, Microsoft's vice-president for commercial sector industries.

Still, an Uncertain Future

This partnering approach makes it possible for Better Place to keep its costs under control. It has just 70 employees. Better Place raised $200 million in 2007 to fund its launch and the costs of running the pilot project in Israel. Its subsidiaries in Israel, Denmark, and Australia are in the process of raising funds to finance startup and expansion costs.

While Better Place is one of the electric vehicle industry's pioneers, its future is anything but certain. Agassi placed a big bet on the idea that consumers will want to buy EVs as their primary vehicles—and battery switching would be necessary for them to take long trips. But others, such as EPRI's Duvall, believe it's likely that consumers will initially buy EVs as second cars, and all they'll need is recharging stations. Another Silicon Valley startup, Coulomb Technologies in Campbell, Calif., has developed charging technology and a software system for coordinating with the grid.

Agassi is confident his strategy will prevail, however. He contends: "Nobody else has a solution that targets mainstream consumers, with a nice car and with unlimited range and capabilities."

Hamm is a senior writer for BusinessWeek in New York and author of the Globespotting blog.

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