Despite concern that Better Place is losing millions as it slowly brings electric vehicles to market in Israel and Denmark, some in the cleantech industry are also worried that the Israel electric vehicle (EV) company is the only one out there trying to make the business work.
A recent article titled, ‘Does Better Place Have A Monopoly On Electric Cars In Israel?,’ Business Insider analyzed Better Place’s role in the Israeli market, noting that once the company starts to sell its cars in Israel, it will have the only electric vehicle available in Israel and will control the country’s only legal EV charging network. Is this a good or bad thing?
Better Place has gained international fame for its innovative idea of battery-swapping at charging stations, which is intended to solve some of the major problems with EV’s, including relatively short range and relatively long charging times. On a long road-trip, the idea is that drivers can stop at a charging station, immediately have a fully-charged battery swapped in for their spent battery, and then continue on their way.
The idea is so promising that an Israeli car rental company, Eldan, has already signed an agreement with Better Place to offer the electric vehicles as an option for customers.
But the fear is not new that Better Place is building a monopoly, particularly because its battery swapping stations will require all drivers to use the same Better Place batteries. In November 2010, GreenProphet reported on an article in the Israeli newspaper Haaretz that warned of Better Place’s growing monopoly.
The Haaretz article specifically noted a document detailing plans by the Ministry of National Infrastructure, and signed by its Director of Planning and Policy, Nofia Bachar stating that:
“All electric cars imported into Israel will contain a mechanism that will block them from being charged anywhere but at charging stations. Only companies that offer charging stations and a control center will be permitted to provide electricity for the cars.”
The article continued by saying that “since Better Place is currently the only company building such stations, this will effectively give it a monopoly (on electric cars available in Israel).”
Monopolies on public service utilities are almost the norm in the tiny and relatively isolated (in terms of business neighbors) country of Israel. This is particularly true because the country is particularly subject to the whims of whichever government administration happens to control the parliament, which was under the political yoke of the socialist leaning Labor Party during the first 29 years of the country’s existence.
All the Israel’s and the Palestinian Authority’s electricity is still being supplied by the Israel Electric Corporation, a monopoly and has close ties to the government.
But Better Place is not only deploying its cars in Israel. It has already begun to sell in Denmark and is hoping to expand its network globally. The problem is not its relatively monopolistic business plan might not fly as well in the U.S. and Europe.
Customers can only choose from one EV model and must subscribe to the Better Place service, which includes lease of the Better Place battery and the cost of operation and maintenance of the car, the batteries, and electricity for charging the batteries at home and in public charging stations. That’s a lot of money and it will all be fed directly to Better Place.
It’s the equivalent of paying General Motors for the car you purchase, the gas you buy each time you fill up the tank, and the cost of fixing the transmission and engine parts when anything goes wrong.
There are monopolies and there are monopolies. Better Place’s monopoly is the first mover’s monopoly. It is temporary and exists because no one has taken the bold steps that Shai Agassi and Better Place has taken. I would guess that BP’s future competitors are watching its progress to see how they might copy it and avoid its missteps. The race is usually for second place not for first place. Think Microsoft.
My concern is what defensive steps the oil, gas, and localized coal monopolies will take in the face of Better Place’s possible success in spreading the use of the electric car and in lowering its sticker price and cost of ownership to make it competitive with cars powered by internal combustion.