Software millionaire Shai Agassi is determined to make Israel the world’s first country to abandon petrol for electric cars. He has Shimon Peres as well as Renault-Nissan backing him — and Gordon Brown is showing interest
When Gordon Brown visits Israel this weekend, the talk will not be exclusively about conflict resolution and peace negotiations. For some of the time at least, the British Prime Minister will be focusing on, of all things, electric cars.
Mr Brown is due to attend a business conference in Jerusalem on Sunday evening, along with Israeli leader Ehud Olmert, where he will be finding out more about Project Better Place — an audacious plan to create a viable electric vehicle that will ultimately replace petrol-engined cars.
Project Better Place was officially launched in January 2008 with a commitment from the Israeli government to invest £50 million. Renault-Nissan has been persuaded to come on board and produce the vehicles, and hundreds of millions of pounds have been raised in investment capital to develop supportive infrastructures — including a network of battery-recharging points, the electric-car equivalent of petrol stations.
Already, Portugal and Denmark have signed agreements to install electric-car networks in their countries using Project Better Place technology. Even the oil industry, which has most to lose if the plan succeeds, wants a piece of the action. In the spirit of “if you can’t beat them, join them”, the Israel Corporation, which owns Israel’s largest oil refinery, has committed up to £50m for a 33.3 per cent stake in the company. Idan Ofer, the Israel Corp chairman, explained the move by saying: “If I didn’t do it, somebody else will. What’s the point of fighting something that’s inevitable?”
President Shimon Peres, who has been integral in getting Project Better Place off the ground, has said that the electric car will be the key to relieving the world’s dependence on the oil produced by terror-supporting Islamic countries. This in turn will go a long way to stripping those states of their political clout. “We are not going to fight the producers of oil,” Peres says. “We are going to produce alternatives.”
The man behind Project Better Place is a 40-year-old Israeli high-tech entrepreneur called Shai Agassi. He believes that Israel is about to bring about the greatest technology shift in the motorcar since Henry Ford introduced his mass-produced Model T a century ago. It is a revolution that could have massive implications for the oil and energy sectors, for international politics, and for the environment. If successful, it will introduce a whole new corporate concept — the electric-car infrastructure operator.
“If what I’m saying is right, and it is right, this will be the largest economic dislocation in the history of capitalism,” says Agassi.
Project Better Place, he claims, will have a nationwide infrastructure for electric vehicles in place in Israel by the time mass production of the cars (by Renault) starts in 2011.
“By 2020, gasoline-fuelled cars will be obsolete,” Agassi predicts. “You would no more consider driving a gasoline-fuelled car than you would think of lighting a paraffin heater, or writing a long letter with a pen, putting a stamp on it and sending it in the mail.”
It may sound far-fetched — and after all, he is a car salesman. But there is a compelling business plan, and serious funding, behind Agassi’s claims.
The man himself is a cross between David Ben-
Gurion and Bill Gates — a mix of Zionist visionary and high-tech prophet. “For the past 60 years, the world has been preoccupied with solving Israel’s problems,” he observes. “It’s about time Israel started solving some of the world’s problems instead.”
In a world plagued by spiralling fuel prices and a failure to cut carbon emissions, only the oil companies and major oil-producing countries will be hoping that Project Better Place fails. Renault’s electric vehicles (EVs) will have zero carbon emissions, thus cutting greenhouse gases by an estimated 20 per cent in one fell swoop, if conventional vehicles, as Agassi predicts, become extinct.
In addition to the economic advantages of finding a far cheaper substitute for oil, Israel and the Western World will reap geo-political advantages. “The global imbalance caused by paying $150 a barrel for oil cannot be sustained,” says Agassi. “At present we are paying $4 trillion a year to 12 countries.”
With many of those countries hostile to Israel, it is no surprise that Prime Minister Olmert was eager to commit $100 million and agreed to offer generous tax incentives for EVs.
Although the project is incubating in Israel, Agassi’s plan was first presented in 2005 in Davos, Switzerland. As president of the Product and Technology Group at German software giant SAP, and considered one of the world’s brightest young high-tech executives, Agassi was chosen to write a paper on the future of energy, transport and the environment,
to be presented at the World Economic Forum.
“My paper was entitled ‘Running a country without oil’,” he recalls. “But the plan did not really take off until December 2006, when I presented my ideas to the Saban [US-Israel] Forum in Washington DC.”
After Agassi spoke, President Peres, who was then Israel’s Minister for Regional Development, approached him. “He asked me three questions,” says Agassi. “Can you really do it? Is there anything more important than getting the world off oil? Can you raise the money for it?”
Agassi answered yes to the first and last questions and no to the middle question. “The following two weeks were incredibly exciting. Mr Peres took me around to meet the entire Israeli political and business leadership.”
Olmert agreed to back the project fully, provided Agassi could get one of the world’s major vehicle manufacturers on board. “Mr Peres used his international connections,” he adds. “Five major vehicle manufacturers were invited to meet with us at Davos in 2007. Three didn’t bother to turn up. One came and listened politely and went away. But Renault-Nissan were with us within five minutes of hearing what I had to say.”
Renault has adapted its highly successful Mégane saloon car using a lithium battery, developed by Nissan together with NEC, which is capable of running for 106 miles before being recharged. The current fleet of 50 cars in Israel looks from the outside like any other Renault Méganes, with two exceptions — there is no exhaust pipe, and inside the petrol flap is a plug socket rather than a tank opening. When driven, the car is almost silent, thus greatly reducing noise pollution as well as having zero carbon emissions.
“The cars use 25Kw per hour,” explains Agassi. “So if you use the cars for, say, two hours, that’s the same amount of electrical energy as leaving your PC on all day.”
In terms of technology and engineering, Renault-Nissan does not need Project Better Place, even though it was Agassi who acted as the catalyst for the project. What the Israeli connection gives the Franco-Japanese automobile manufacturer is a viable infrastructure and business and marketing package for selling its innovative car.
Agassi credits former US President Bill Clinton with his commercial strategy. “It was back at that Saban Forum in 2006 that Clinton helped me,” he says. “I was sitting in the front row directly in front of him. So I took advantage of a break to go up and talk to him. I told him that one piece of my puzzle was still missing. How do I persuade the average car-buyer to go into a dealership and invest money into an electric car?
“Bill Clinton stressed that, in his opinion, the average car-buyer would not go into a dealership for such a car and I had to find a way of getting the car to the consumer for free. That’s what leadership is about. Good leaders put the big questions to you and challenge you and inspire you to find the answers.”
Agassi’s answer was to build a business model based on the mobile-phone company. These build an infrastructure and provide handsets for free, provided customers make long-term commitments. Project Better Place’s Israeli customers will pay a monthly, all-inclusive fee with a choice of packages based on the maximum amount of mileage that the subscriber intends to drive each month. Contract commitments are likely to be for a minimum of four years.
Project Better Place will install 500,000 recharging points throughout Israel in a network that will include points on pavements and in car parks encompassing one in six parking places in the country. In addition, there will be several hundred battery-exchange points in petrol garages across Israel where vehicles can drive up and swap their battery for a charged-up substitute. Subscribers will of course also be able to recharge at home.
While Agassi is reluctant to reveal too many technological details about the network, the intention is to make it as environmentally friendly as possible with maximum use of solar energy and the possibility of batteries discharging small amounts of energy back into the grid. In Denmark, which signed an agreement with Project Better Place in March, wind energy will be used to fuel the recharging points. Project Better Place estimates that if a country’s entire fleet of vehicles runs on electricity, it will add 6 per cent consumption to Israel’s national grid, much of it in off-peak hours.
“There is nothing revolutionary about the electric car from the gas-emissions point of view,” says Avraham Israeli, a leading environmental consultant. “Even if Agassi has his figures about electricity consumption correct, then power stations will have to burn up a lot more fossil fuels. But if Agassi can develop an infrastructure in Israel based on solar energy and one in Denmark based on wind energy, then that is a revolution, not the electric car per se.”
As well as the Israeli government and Israel Corp, other major investors are California VC fund Vantage Point, New York investment bankers Morgan Stanley, and a range of other investment funds and wealthy individuals such as Canadian tycoon Edgar Bronfman Jr and financier James Wolfensohn.
“I met 200 potential investors,” reveals Agassi, “but less than 20 bought into the idea. From time to time I meet some of these people who refused to invest in Project Better Place, and they tell me that they always knew I was on to a great idea. I also met with many governments that turned me down. They will all change their minds eventually.”
Earlier this month came the news that the Portuguese government had reached an agreement with Renault for an electric-car network in its country. Technically, the French carmaker has no obligation to ask Agassi’s company to set up the network, but, as the only company worldwide which so far has any experience in developing such infrastructures, Project Better Place is confident of getting the contract.
“Next year here in Israel we will have 500 electric cars on the road,” says Agassi, “being tested by all sectors. That means 50 taxis, 50 police cars, 50 cars with high-tech companies etc. In 2010, production and marketing will start for corporate and institutional clients, and in 2011 mass-production will be underway for the entire market.”
Agassi’s confidence in the project is persuasive, and while speaking to him it seems inconceivable that he can fail. But industry experts feel that the Israeli’s Achilles’ heel is his lack of background and expertise in the automobile and energy industries. His business plan may sound great on paper, but can Renault-Nissan deliver a car and a battery which will match the high performance of conventional vehicles? Agassi is completely dependent on Renault-Nissan’s ability to deliver.
On the other hand, Agassi’s lack of automobile experience but understanding of the business world may have been his strength which has allowed him to adopt a fresher, more innovative and universal approach. The electric car has been a graveyard for dozens of aspirant entrepreneurs in recent decades, virtually all of them automobile experts, with only a small number of petrol/electric hybrids having had very limited commercial success.
Until recently, Malcolm Bricklin, an American, was seen as a serious rival to Agassi in the race to mass-market EVs. Bricklin, 69, a highly experienced vehicle manufacturer and importer, was developing an EV with Chinese manufacturer Chery. But the plan unravelled when it became clear that Chery could not produce a car of a high enough standard for Western consumers. Nor had Bricklin envisaged an infrastructure-provider like Project Better Place, which would help overcome the EV battery’s highly limiting 100-mile barrier.
Agassi’s background has been entirely in software and business. The son of an Iraqi-born father and Moroccan mother, he grew up on military bases around Israel. With a degree in computer science from the Technion, he set up his first company, TopTier Software, together with his father Reuven when he was 24. SAP acquired TopTier for $400 million in 2001, and Agassi has subsequently sold three more software start-ups, one of them to SAP. He joined SAP in 2002 and, despite not speaking German, he was expected to be appointed CEO of the world’s third-largest software company last year, when he suddenly quit to set up Project Better Place in 2007.
He has kept his headquarters in Santa Clara, California, where he was based with SAP, he says, because he did not want to move his family, rather than for the marketing importance of being headquartered in the world’s largest automobile market.
If a generation or two ago Israel’s finest would become IDF career officers or politicians or both, today the country’s best talents, like Agassi, are attracted to business and high-tech. But Agassi laughs at suggestions that this is weakening the country. “In fact, my father served for 25 years in the IDF and reached the rank of colonel. He built the country’s first cellular-communications infrastructure for the army.
“But Israel has enough generals, and it will be stronger if it has some General Electrics and General Motors,” he says.
Yet there is much of the politician about Agassi, who enjoys speaking about everything from education to the Israel-Palestinian conflict. Still, he probably realises a profound 21st-century truth, which goes far deeper than automobiles and energy. The corporate business world is far more powerful and able to affect radical changes than the politicians — and even the generals.
The leaders of the G8 can meet in Japan and vow to reduce carbon emissions, and Western nations can discuss strategies for clipping the wings of Iran. But if Agassi’s Project Better Place realises its massively ambitious plans, then the Israeli software specialist-turned-automobile infrastructure entrepreneur would have done far more to prevent global warming and arrest the rise of Islamic extremism than Bush, Brown and all the Western world’s leaders put together.
As he insists: “This is not about Shai Agassi. This is about making the world a better place for our children and future generations.”
A car modelled on a mobilie phone
If Shai Agassi has his way, by 2020 most of us will be driving electric cars. Under his plan, motorists would get their car free when signing up to a package that would allow them, for an monthly subscription, to use a nationwide network of recharging points. If that sounds familiar, it is because he has based the scheme on the way consumers use and pay for mobile phones. Agassi is reluctant to speculate about the cost of the package at this stage. Renault hopes to mass-produce its first electric car — a battery-powered version of its popular Mégane saloon — by 2011. The car giant says it will have a range of just over 100 miles between recharges, and will be no slower than the petrol-powered version.
This contrasts with one of the most commercially successful electric cars currently on the market. The G-Wiz, a tiny vehicle designed for use in cities, can travel up to 48 miles on a full charge (typically 30-40 miles in normal road conditions) with a top speed of 50mph.
The car, which, with the right electricity tariff, produces zero emissions, costs up to £10,588, but only 1.5p per mile to run. There are around 60 charging points in Central London, but when you find one, be prepared for a long wait. Fully charging the battery can take up to eight hours.