A New Twist on Electric Vehicles: Battery Rentals

Start-up Project Better Place plans to establish a network of charging spots and battery exchange stations where workers will replace spent batteries in hybrid electric vehicles.

By Salvatore Salamone

Posted April 1, 2008, at 1 p.m.

Borrowing a business model from cellular service providers, the well-financed (it's already raised $200 million in funding) start-up Project Better Place plans to change the way people use plug-in hybrid electric vehicles. Similar to the way wireless operators deploy a network of cell towers to provide mobile phone coverage, Project Better Place will establish a network of charging spots and battery exchange stations where workers will pull out and replace spent batteries in about the same amount of time required to fill a conventional car's tank with gas.

The company will partner with car makers and will own the batteries in the cars. People who buy these cars will subscribe to the network and get subsidized vehicles. No pricing has been determined, but similar to cell phone packages, drivers will pay a monthly fee that will be based on the term of the contract and the usage of the service.

The attraction of the plan for energy-conscious consumers is two-fold. First, vehicle owners save energy — and help save the environment — by using electric cars and trucks. Second, being able to replace a battery on the go extends the useful distance they can drive on electric power.

"We need to rethink how to bring together consumers, existing technology and the entire car ecosystem to establish the next-generation infrastructure that will provide energy for [drivers] that is not dependent on liquid fuels," says Shai Agassi, founder and CEO of Project Better Place and former president of the Products and Technology Group at SAP AG.

To speed adoption of electric vehicles, the project will rely on the existing battery technology that's used in today's plug-in hybrid vehicles, rather than waiting for improved batteries that will offer greater driving ranges. Using existing batteries means deployment can begin right away. In fact, the project starts this year, and the company hopes to have 100,000 global subscribers enrolled in the recharging service by the end of 2010.

Naturally, newer technology will be embraced as it comes along. That was evident in a recent announcement: In January, the Renault-Nissan Alliance and Project Better Place signed a memorandum of understanding to develop all-electric vehicles in Israel. The Israeli government will provide tax incentives to customers, Renault will supply the electric vehicles, and Project Better Place will build and operate an Electric Recharge Grid across the entire country. Under this agreement, the first vehicles will be available for customers in 2011.

Doubling Up on Energy Savings

If this subscription model of recharging batteries catches on, it could result in a second energy saving for energy-conscience consumers. The saving would come about if the stations that swap out batteries recharge them at times that are optimal for the energy grid.

In a typical scenario today, owners of plug-in hybrid electric and electric-only cars recharge their vehicle's battery during the day. For example, a commuter might plug the car in at an office or train parking lot, while a shopper would recharge at the mall. In such scenarios, the charging takes place when there is peak demand for electricity.

If electric vehicles could be charged during the night instead, that would significantly reduce the demands placed on the power grid. A 2007 study by the National Renewable Energy Laboratory simulated the impact of various charging scenarios. It found that on-demand charging — that is, charging during the day — would increase peak electricity demand from 2.5 percent to 4.6 percent, requiring a utility to install additional capacity to accommodate this new load.

This is something that efforts like Project Better Place might consider in the future. The reason this is important is that if a company swaps out batteries and holds off on recharging them until demands on the power grid are low, electric utilities could avoid adding capacity simply to support the extra power demands of electric vehicles charging during the day. For the car owner, this would be a second green contribution (the first being the use of the electric vehicle), since it would reduce the need for utilities to burn more coal or use other energy sources.

Looking to the Future

One concern consumers might have with the battery subscription concept is locating a replacement station when on the road. This is a problem shared by other alternative-powered vehicles.

For example, owners of hydrogen-powered cars face a similar challenge. In the case of hydrogen, efforts like the California Hydrogen Highway are taking aim at the problem. Project Better Place has similar plans to build a network of stations around the world to swap batteries and recharge cars.

Industry experts suggest that concerns over this might be eliminated by tapping other technologies — such as using global positioning systems (GPS) and location-based services in a car — to help a driver find the nearest battery replacement station.

Innovative approaches like that of Project Better Place and others that extend the useful range of electric and hybrid vehicles might be the key to kick-starting the slow-to-develop plug-in hybrid vehicle market.

Bio: Salvatore Salamone is a senior editor at Ziff Davis Enterprise. He has more than 20 years of experience writing about science and technology for major industry trade magazines and is the author of three business technology books.

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