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Battery Swapping Bust: Electric Car Company Better Place Shuts Down

By Joe Romm

"Battery Swapping Bust: Electric Car Company Better Place Shuts Down"

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Israeli tech company Better Place announced plans on Sunday “to liquidate after burning through almost a billion dollars.”

This happened despite the fact that demand for electric vehicles is growing steadily because of improving battery technology, high oil prices and increasing concern over pollution.

The Washington Post says this shut down “capped a stunning fall from grace for Better Place and its founder,” Shai Agassi, “a former high-tech whiz kid who sought to change the world by building a revolutionary network of battery-swapping stations.”

Well, I don’t really know how “stunning” it is. Yes, lots of people put money into the company — but a lot of experts on alternative-fueled vehicles and electric cars had big doubts this business model made any sense. See my February 2009 post, “Does anyone think battery swap out is useful or even needed for electric vehicles?

Since one can legitimately ask why one would go to all the trouble of blogging for nearly 7 (!) years if not to have the chance to say I told you so once in a while, I will excerpt that post:

I recently asked my EV wonk friends what they thought of the battery swap out model, and I will reprint some of their answers below. I have never actually found anyone who thought it was a viable idea. Where, for instance, would it be done? Sunday’s NY Times (2/1/09) asserts: “For longer trips, beyond 100 miles, there would be battery-exchange sites — probably located at bays in today’s gas stations.”

Sorry. At least in this country, gas stations are very prime property. They don’t have any excess space for what would be a relatively little-used piece of capital, an automated battery swap out station. That’s why in pretty much every city gas stations are shutting down little-used garages and bays and putting in mini-marts.

Here are some more detailed critiques from 4 years ago, which help explain why Better Place went belly up even though many electric vehicles, like the Tesla, are doing just fine in the market today:

Greg Hanssen, co-founder of EDrive Systems, commmercializing Lithium-Ion conversions of PRIUS. Also co-founder, EnergyCS, engineer with long experience in hybrid, electric power systems, and co-chair of Production EV Drivers Coalition

Personally, I think the battery swap idea is really dumb.

It’s people who don’t have any experience with electric vehicles that come up with ideas like this and hyper fast charging, which is also relatively unpractical as it’ll never be as fast as liquid refuel and will be expensive and hard on the batteries.

As for battery swapping, check how this was done with EVs in the early 1900s. Edison’s fleet of electric trucks had central stations where batteries were charged and swapped… Check out the book “The Electric Vehicle and Burden of History”

If fast refueling is your goal, then PHEVs [plug-in hybrid electric vehicles] are still the best option. Use the battery for what it’s good for — daily driving needs that can be filled with overnight charging.

For longer distances or fast refueling, liquid is still the way to go.

Before it went belly up, Plenty magazine’s blog raised a couple of issues:

• wait, uh, battery swaps? What quality controls will be in place to make sure the battery that’s getting plopped into your car is in great condition and just as good as the one you got from the manufacturer and are now giving up? And imagine how many batteries would have to be in stock at each charging station to make sure that any driver will be able to drive off ready and charged. Sounds pricey.

• Doesn’t it all sound like a bit of a hassle? The project is an attempt to remedy an imperfect system. It can’t help but feel inelegant. Is the battery swap system superior to replacing every conventional vehicle in Hawaii with a plug-in hybrid? Plug-ins offer many of the same advantages without the massive infrastructure investment or the strange treatment of batteries as if they were luggage carts. For now, only two vehicles, made by Better Place partners Renault and Nissan, are expected to be compatible with the swapping stations, at least until other carmakers get on board. My bet is that it’ll take some convincing before several more EV makers agree to standardize their battery placement and vehicle designs for the sake of an unproven technology.

Long-time EV expert

Actually, our experience w the last generation of EVs (some of which remain on the road) taught us that unlike propane tanks, drivers very much feel personal ownership of their batteries, and would definitely have issues like the one described in the first point [made by Plenty]. You’re right that in the PBP model the customer doesn’t own the batteries, but the attachment has less to do with ownership and more to do with care and feeding — many drivers charge and drive their vehicles very specifically in order to maximize range, preserve life, etc. — and they become used to the specific performance of their pack. It’s exacerbated by the fact that there can actually be a fair amount of variation in quality of the pack before it falls out of manufacturer spec and would be replaced. Since this tends to manifest itself as range variation, it’s very possible a customer might swap a pack that does 100 miles and get one that only goes 80 or 90, or worse, has a bad module that causes the car to go into reduced performance or something. The people who do only average driving won’t really notice this, but the average drivers likely won’t be the ones depending on swapping stations. It may be that the early adopters are more attached to their packs than mass market customers will be, but the early adopters will last 2-3 years or more at currently expected rates of production, and their experiences will be the ones that set up the next folks’ expectations.

An engineer and utility EV expert

That is a solution for a problem that does not exist.

The concept of a third party owning the battery is a nice one. Has been for years, but no one will step up and do it (or, in reality it has not been economically feasible). However, the idea of having battery changing stations as a sort of “fuel” station is a particularly bad one. For one, it assumes that there is not possibly enough energy in the battery of the car to accommodate the driving needs of the owner. Statistics show that this is false for the vast majority (see National Travel Survey). People somehow always think they need to drive farther than they actually do.

Cars are parked 96% of the time. They can charge.

Battery changing is a messy, mechanically complicated, labor intensive process. That is why the industrial community has been moving away from this for years. Instead, they move toward fast charging, and even fuel cell power.

And, by the way, the first objection is not irrelevant. What if you got your battery swapped out expecting 100 miles of range to get to the next station, and it turned out to be a dud? Maintaining pack quality would be one of the major concerns with such an operation.

So, in conclusion, most people don’t need to swap batteries. There is plenty of range on board. For longer trips, you can either rent a gas car, or you could take advantage of a few fast charging stations that could be placed strategically on major long-distance thoroughfares. Or, of course, you could also choose to own a PHEV like the Chevy Volt, in which your engine is only used in extraordinary circumstances.

California official and alt fuel expert

1) Entropy matters. The energy used in bulk transport, bulk storage, and on-site logistics would be HUGE.

2) Volumetric specific density matters. The space requirements for bulk transport, bulk storage, and on-site logistics would be HUGE.

3) Gravimetric specific density matters. The weight penalties incurred in bulk transport, bulk storage, and on-site logistics would be HUGE.

4) Costs matter. The incremental costs of associated with 1, 2 + 3 above would be HUGE.

5) Competitiveness matters. The cost effectiveness of their technology needs to be compared to a post-2010 hybrid configuration using li ion or li polymer battery technology, achieving > 50 mpg, gasoline prices in the $2 — 6 range, with resulting paybacks on incremental investments of <$5,000 – $8,000 of between 5 and 12 years. The proposed technology would have (a) MUCH higher incremental costs to amortize 1 + 2 + 3 above, (b) have gge fuel economy no more than 2x higher than a benchmark hybrid, (c) resulting payback well in excess of 15 years or (d) require gasoline costs well north of $7 per gallon to achieve payback in 10 — 12 years.

6) This has less scrutiny than the Madoff Ponzi scheme at its half-life. Any serious sunshine brought on this “pathway” will show the following:

a. How desperate we still are for a Holy Grail solution, given the pragmatic realities of lithium battery costs and gravimetric / volumetric density tradeoffs.

b. How easy it is to foster web-germinated confusion on untested technologies

c. How hard it is in reality to configure, demonstrate, manufacture in bulk, and survive with a viable business for advanced alt fuel technologies.

d. How important it is to let the facts set us free from the curse of speculation.

e. How important OEMs are, despite all their imperfections.

7) This is already at its half life. When 1% greater scrutiny is applied to this “business model” and technology, it will wilt faster than California’s bond rating.

8) In other words, it fails due to its inability to create the following:

a. Credible industrial policy to establish a viable, large scale advanced battery manufacturing capability in North America (Asian OEMs produce >90% of lithium ion batteries today…)

b. Credible gasoline tax policy which establishes a consistent and clear price signal on carbon sufficient to allow alt fuel vehicle purchasers to face high degrees of certainty on payback of initial investments in either vehicle capital cost, infrastructure capital cost, or both.

c. Credible optimization via OEM expertise — especially hybridization optimization.

d. Credible infrastructure burden cost sharing to escape the 1st 10 years of the “Valley of Death” period during which alternatives fail due to slow broad market acceptance.

My bottom line back then is still my bottom line today:

Yes, the chicken and egg problem remains a huge one for specialized infrastructure like battery-swap out equipment. Who is going to cover the high capital costs in the beginning for widescale deployment of equipment that is little used? But who would buy the vehicles until the swapout system is in place?

More critiques can be found elsewhere on the web: Green Smoke and Mirrors: A Voice of Reason On Israel’s Electric Car Hype and A Reader Responds to Project Better Place Getting Wired.

For large countries in particular, I think plug-ins make the most sense for the foreseeable future.

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14 Responses to Battery Swapping Bust: Electric Car Company Better Place Shuts Down

  1. prokaryotes says:

    Yet…

    In their recent SEC filing, on page 38 outlining future plans, Tesla discusses what factors may affect the adoption of electric vehicles. Specifically, the filing says that the ability to “…rapidly swap out the Model S battery pack, and the development of specialized public facilities to perform such swapping, which do not currently exist, but which we plan to introduce in the near future.”

    What is Tesla thinking getting into battery swapping? Perhaps they are thinking that their Supercharger fast-charging stations just aren’t going to be enough. To truly compete with gas-powered vehicles, electric vehicles need a similar “refill” time. Battery swapping could make that possible, eliminating one of the biggest criticisms of EVs; their long recharge time. http://cleantechnica.com/2013/05/22/tesla-battery-swap/

    • Sasparilla says:

      It’ll be interesting to see where Tesla goes here – their charging infrastructure already can charge a model S to 250 miles range in 30 mins if memory serves – which already seems pretty good to me.

      One thing that Tesla has talked about previously is acknowledging the gradual capacity loss of Li battery technology over time and have offered customers a guaranteed price for a replacement pack for half the current price (by 2020 I think) – so they built the vehicle to be able to switch the pack out relatively easily (and allow the vehicle to last beyond the pack life).

      I wonder what they’ll do and how useful swapping is if they do offer it (personally I hope they don’t pursue this as its not holding back EV adoption – its battery cost that is holding back EV adoption at this point IMHO).

  2. Sasparilla says:

    Great article Joe. I think the “engineer” said it best – a solution in search of a problem that didn’t exist. A Better Place just wasn’t a place we needed to go to.

    It’s also good to keep in mind that Li batt price per kWh has dropped about 4% per year and is expected to continue doing so throughout this decade and into the next one (that’s without major breakthroughs). Just using that average, small plug in batts will be a no brainer option for most vehicles by 2020 or so just on a cost basis alone.

    Meanwhile huge amounts of commercial/private money is being poured into Li research to get those big breakthroughs, as well as perfect better durability (i.e. keeping capacity over the longer life of a pack) and faster charge times (the cells being able to charge more rapidly). We’re in the opening innings of Li battery tech at this point – Li tech will just get cheaper, more powerful and more durable as time goes on.

  3. Ed Leaver says:

    Thanks Joe. Those curious about what goes into properly integrating an 85 kWh battery into a world-class luxury sedan might see Dan Edmonds’ 2012 Tesla Model S Suspension Walkaround. Battery shots are toward the bottom. As your CA alt fuel expert stressed, volumetric and gravimetric energy densities are key issues for any fuel; Tesla is designed from ground up to minimize their hit. The (ironic) third-rail of US taxes notwithstanding, his point 8b cannot be overstressed:

    Credible gasoline tax policy which establishes a consistent and clear price signal on carbon sufficient to allow alt fuel vehicle purchasers to face high degrees of certainty on payback of initial investments in either vehicle capital cost, infrastructure capital cost, or both.

    Tesla S can run from 150% to 300% the price of Chevy Volt, which itself is not cheap.

    • Brooks Bridges says:

      But it’s a luxury sports car, competing against Porches and the like – and it’s price competitive with them.

  4. prokaryotes says:

    But what i don’t understand is why Israel is not embracing a smart grid solution for security reasons. What i read is that oil is very pricey there and they have a lot of sunny weather. Electric battery infrastructure – decentralized energy storage would help Israel’s sustainability, just makes sense.

    They have many projects and some progress – maybe they can partner now with somebody else http://www.betterplace.com/global/progress

  5. Lou Grinzo says:

    Great article, but I think there’s a simple reason that most experts overlook or underplay: Battery swapping is just plain weird for newbies.

    I’ve been driving a Nissan Leaf for exactly two months, and I’m noticing that when I’m approached by non-EV lovers about it, they tend to fall into two categories:

    1. A group of about 20% who love the idea of an EV and being able to flip the bird at oil companies with every plug-in. (Trust me, the bird flipping part is still oodles of fun.) They want to know the details of “life with an EV”, and I often encounter a person who wants facts to try to convince a less enthusiastic spouse. I gladly supply all the help I can.

    2. The remaining people are highly skeptical of the whole notion of EVs and ask questions like, “Can you drive it in snow?”, “Does it go on the highway?”, “Does it REALLY run on just electricity?”, and my all-time favorite knee-slapper, “Does it come with a really long extension cord?” (That last one stopped being funny the first time I heard it, during the first oil embargo in the early 1970s.)

    I think if you throw an entirely new business model and way of refueling your car into the mix, one that’s even weirder than (gasp!) plugging in the car, it’s just too far out of many peoples’ comfort zone.

  6. Spec says:

    EV people knew that this was going to fail. No one wants to buy a $30K vehicle and get LOCKED into a single source supplier agreement for electricity. People want open standards supported by multiple companies. I think battery swapping could work . . . but maybe 20 years from now when battery chemistry mixes have stabilized, lots of EVs are being built, and the car companies can get together to agree upon a battery swap standard.

  7. Ivan Gati says:

    Short sighted investors and the public needs just a little time to adapt to the Better Place model. When intel started to make memory chips it was very expensive. The founders knew they had a great idea and that the costs would go down drastically over time. What did they do? Their cost was $2.50 / chip and they sold it for $1.00/chip They got millions of orders and the rest is history.
    The same simple business model applies here to Better Place.
    What is wrong with the lack of business visionaries can they not see the world wide benefit?

  8. Raul M. says:

    Rental EV’s would be more practical where the rental car is just turned in an another rented.

  9. There is no way that an electric car can compete with a petrol engined car on long journeys. Oil has far too much energy for price and volume.
    There is an excellent place for electric cars in the urban cycle. Most vehicle trips are only ten or twenty miles and this can be done efficiently and cheaply with electric.
    Why has GM based its Volt on a two ton gas guzzler vehicle. Is it trying to prove that electric does not work and we will all stick to petrol.

  10. BBHY says:

    It is one of those ideas that sounds good at first, but the logistics get unworkable in normal every day situations.

    Washington DC is about 150 miles away from Ocean City, MD.

    On Memorial Day weekend the population of OC goes from about 10,000 to over 300,000. If we assume that people drive there Friday night with battery swap electric cars, that means you have to go from having a tiny number of spare battery packs to a huge number in only one day. Picture the expense of loading thousands of large battery packs on trucks and hauling them to the beach. Don’t forget that everyone will want a fresh pack just before the start their trip, so you can’t take the packs from the areas where people are starting their trips.

    If the number is under estimated, then a lot of those people arriving with dead packs will not have a fresh one available. Stock too many and that is even more wasted money, because battery packs are very expensive. Money night everybody goes back home, so now you have to transport all those battery packs back, another huge expense. It is not a workable system.

    On the other hand, once people arrive Friday night they will park their cars in hotel and condo parking lots, where they could simply plug in and the next morning have a fully charged vehicle ready to go. Much simpler, easier, and more practical for everyone involved. The hotels even get to sell an extra service and make a little extra money. Yea, everybody wins! (Except the nasty old oil companies, but we don’t like them anyway.)

    • Paul Klinkman says:

      We need battery swaps only for long mileage days, and plugging in every night. If thousands of cars descend on Ocean City on Friday night, they all plug in.

      On holidays, battery charging station owners will be tempted to fast-charge their battery packs so that perhaps 15 minutes to an hour after one customer drops off, the next customer gets a full charge. This might stress the battery a bit each time it’s done, and the somewhat damagingly fast recharge will have to be expressed in a premium holiday price paid for that charge, but it solves the battery turnaround problem. Most of the year the station will slowly trickle charge the same batteries with little damage because they have the extra time.

      All of this is far beyond BetterWorld’s plans and capabilities, but it could be done.