The Japanese government has given Palo Alto, Calif.-based Better Place the go-ahead for a pilot project to demonstrate the startup's battery-swapping approach to refueling electric cars.

Better Place will team up with Nihon Kotsu, the largest taxi operator in Tokyo, for the project, which is scheduled to start in January 2010. The project would show how Better Place's idea, which has received no small measure of skepticism, would work under heavy-driving scenarios.

Instead of developing charging devices and related communications networks, Better Place envisions stations where drivers would quickly replace their depleted batteries.

The idea is novel and raises questions about how fast the swapping could happen and whether consumers would embrace the idea of essentially leasing batteries via a mileage-based subscription plan.

Cost is a big issue. Would the leasing model be as cheap as charging model, in which drivers plug their cars into outlets at charging stations and pay for the electricity drawn? Coulomb Technologies in Campbell, Calif., is rolling out charging stations and payment plans in cities in different parts of the country.

For the tax project, Better Place said it would build a battery-swapping station in the Roppongi Hills area and support up to four electric taxis.

Tokyo R&D Co. will modify the taxis to accommodate battery swapping, Better Place said. Tokyo R&D also will build the battery-swapping station and develop diagnostic software for the project.

Better Place has lined up impressive support from national and local governments in countries that include Denmark, Israel, Australia and the United States. Many of these local governments have promised to help Better Place obtain permits and/or funding.