Better Place Scores $200M in VC for Electric Vehicle Infrastructure

Do you believe?

Eric Wesoff November 11, 2011

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

You gotta believe.

Either you're in the camp that holds that electric vehicles are going to look like internal combustion vehicles with proprietary designs and battery packs integrated into the platform (like Tesla's platform, for instance), or you're in the swappable-battery camp, with Shai Agassi's Better Place.

Better Place just scored $200 million from their investors in a Round C (bringing total VC funding to date to $750 million) to launch its grand vision of car transportation-as-a-service along with battery swapping. The company states that the company’s valuation is "$2.25 billion (post money valuation on a fully diluted basis)." Company valuations are not usually provided in funding press releases, nor are funding announcements usually made late on a holiday Friday, or in the case of the Israel-centric Better Place, on the Sabbath.

The company claims that "the launch of the first nationwide electric car networks in Israel and Denmark" is just months away,

Shai Agassi, architect of this thing, says in the press release: “We’ve worked hard over the past four years to engineer and build a technology solution that competes with oil-based transportation. We are entering the next phase of growth for our company where we prove that our solution works, that it’s in demand, and that it scales, as we begin to push into new markets and attract new investors and new partners."

New investors in the Series C round include GE and UBS AG, among others. Existing shareholders, including Israel Corp., HSBC Group, Morgan Stanley Investment Management, VantagePoint Capital Partners, Ofer Group and Maniv Energy Capital, also joined the round.

The company has demonstrated its technology in a number of locations like Japan and Israel, often in fleet applications.

According to the firm, Better Place owns and operates a network of battery switch stations and public/personal charge spots, along with the supply of batteries that power the cars, to provide drivers with instant range extension and the convenience to drive, switch and go across an entire region.

Michael Kanellos, former GTM Editor-in-Chief, has called Better Place "perhaps the most controversial company in green technology. Some say the battery swapping/charging network concept will lower the price of electric cars to realistic levels and provide a better driving and charging experience. Others say the numbers don't add up. Opinions are divided over CEO Shai Agassi, too: is he a visionary leader or just a chick magnet with a PowerPoint?" Kanellos adds, "Personally, I like the Better Place concept -- cars on the Better Place network will age far slower than regular cars -- but the finances represent a daunting challenge. A 'cell' of charging and swapping stations for a metropolitan area runs around $150 million."

The Better Place pricing model seems to work in places with very high gas prices -- maybe Hawaii in the U.S. and Denmark.

To own the Renault Fluence for five years in Denmark, it would cost $27,496 for the car, plus $23,490 for a low-mileage subscription. Kanellos applied his version of mathematics to this and came up with a cost of around 23 cents per mile (in USD), not including the price of a car.

Driving a gas car costs about 12 cents a mile when gas costs $3 a gallon, Better Place told us last year. Electricity, on the other hand, costs about 3 cents a mile: a kilowatt-hour costs around 12 cents and a car can go around 4 miles on a kilowatt hour. A battery for an electric car, meanwhile, will cost around 6 cents a mile over the car's 200,000-mile lifetime.

At 23 cents, the Better Price operating cost is almost double the 12-cent cost of driving on gas.

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Recently, Better Place and PJM Interconnection released a new study that evaluates the impact of one million cars operating in the Washington-Baltimore Metropolitan area and found that a central network operator is the only solution to moderate the impact of EVs on the grid and the wholesale markets -- not to mention drivers’ pocketbooks. However, the study makes assumptions about management and pricing for both central and distributed charging that suggest there will be various ways to solve the conundrum of bringing EVs on the grid en masse.

The study found that with no smart charging, one million cars could add up to $750 million in annual wholesale energy costs -- but that a central network operator, such as Better Place’s swapping technology, could cut that increase in half.