Better Place first announced its intentions to build a network of electric vehicles four years ago. Since then, besides a few demonstration projects, the company has had little to show. But behind the scenes, the Israel-based company has been furiously developing its switch station mechanisms, deployment methodology and--most importantly--its sophisticated network management software. Now, finally, the company announced this week that it has released the first 100 cars onto its Israeli network. And despite many claims that the company's vision was either too late or too far ahead of its time, it turns out that its timing is excellent.
The other piece of news that dropped like a bombshell in the electric vehicle world this week was GM's stunning announcement of a dramatic drop in January Chevy Volt sales: only 603 of the cars were sold that month. The Nissan Leaf didn't fare too much better: only 676 of those cars were sold in January in North America. Although January is a historically slow sales month, it's now clear that neither car will hit its respective manufacturers' stated unit sales goals for 2012 (25,000 for the Leaf and 45,000 for the Volt). Both cars will need considerable rebates or price-slashings in the coming months just to maintain their assembly lines.
In other words, the two biggest electric vehicle bets placed so far by two of the biggest global auto manufacturers both appear to be losing steam. The other EV car models to be introduced this year (including cars made by BMW, Toyota, Daimler, Ford and Honda) might fare better, however it's clear that the year is not getting off to as positive a start as some had hoped for.
So if the Volt and the Leaf aren't setting off fireworks, it opens up the possibility of a managed network of electric vehicles in which the batteries (the most expensive part of the EV) are owned by the network and leased to the drivers as part of a comprehensive transportation package, might be the winning bet. One attractive element of Better Place's system is that once the network of chargers and battery switch stations is built out, then the network is eminently scalable. Add a thousand cars or a million of them and the network can handle it. Thus Better Place's timing for it's Israeli network couldn't be better. Once the system gets up to full buildout by next year, the rest of the pieces of the puzzle (cheaper cars, cheaper batteries and ubiquitous charging infrastructure) will be in place for the company to optimize its business model.
At that point, Better Place will transform from being a builder of infrastructure into an asset manager. Its primary asset will be the thousands of battery packs nestled in the cars in its network. And thanks to the elegant software that manages its network, it will be able to coddle those batteries in such a way that allows it to get as many years out of each cell as possible. The Better Place model won't work as well everywhere in the world: the long driving distances of Western North America, for instance, make the network more costly to build. But over the course of the next few decades, there will be plenty of places for a Better Place-type network to thrive, chief among them Western Europe and emerging Asia.
As the buildout of its first networks in Israel, Denmark and Australia continue, Better Place will still be thought of by some as a "PowerPoint company". But as soon as those networks mature into functioning ecosystems, Better Place will very quickly transform into a complete EV solution. And--quite possibly--a very profitable one.