Israel Electric Cars
Israeli Electric Car Prophecy Comes True
2008-01-25
By Sam Hopkins
It's difficult to discount what would otherwise be a hair-brained scheme like monthly electric car payments when it stems from the mouth of a genius. Last summer in Tel Aviv, when I heard Israeli tech wizard Shai Agassi announce his most ambitious plan in a storied career, I took notice.
It was a large gathering of some of the Middle Eastern country's most prolific "serial entrepreneurs." These are the folks who made Israel #1 out of all foreign countries in listings on the tech-heavy Nasdaq. In the crowd around me were the creators of USB memory drives that fit on keychains, instant messaging technology, and other givens of the 21st century that would have been laughable to lame-brains like me just a decade ago.
But this is the age of the energy squeeze, not those heady days when having .com after your company's name was a license to print money and gasoline cost 89 cents a gallon.
So 39 year-old Shai Agassi, fresh from ditching his product design chiefdom at German business software giant SAP AG (NYSE:SAP) after he was passed over for promotion to the company's top leadership, has turned his attention to the automotive industry. He wants a revolution in how cars are bought and sold--by subscription, like cell phones--and now the boardrooms of the automotive industry are turning their attention to him as they explore possibilities for fossil-free fuel.
This Monday, the New York Times reported that Japanese automaker Nissan Motor Company (NASDAQ:NSANY) and France's Renault SA (Pink Sheets:RNSDF
) have approached Agassi about making his model a reality. The Israeli government is also on board, as the Times reports, with a generous tax incentive plan and $200 million to jump-start the construction of charging facilities.
Agassi's new company, Silicon Valley-based Project Better Place, is supplying the lithium-ion batteries that will juice up the cars (for up to 124 miles on one charge!), while Renault and partner Nissan are set to provide the automobiles themselves.
On the model for mobile phone subscriptions in most countries, the first Israeli consumers in this electric car scheme will pay a subsidized fee per unit (in this case, a car, not a phone). Then, they will pay a monthly fee based on usage. Since electricity prices fluctuate less than gas prices (which in Israel are nearly double U.S. averages), a monthly plan can be implemented in a way that allows consumers to plan ahead and not stick the service provider with a major loss should prices change.
The phone comparisons don't stop there.
Not Nokia... Bigger!
During my time researching everything from clean energy to biotech in Israel, and in meetings with entrepreneurs once I got back to the States, I have heard a distinct urgency and a desire to fly Israel's tech flag higher than ever before.
You see, though Israeli engineers developed ICQ instant messaging, it was bought by AOL. Disk-on-Key was purchased by SanDisk, and the Intel (NASDAQ:INTC) Pentium chip made a worldwide splash from its starting point in suburban Tel Aviv without most computer users knowing where it was born.
Idan Ofer, the main investor in Project Better Place with $100 million, says, "If Israel will ever produce a Nokia, it will be this," referring to the mobile phone mammoth (NYSE:NOK) that put Finland on the world's map of heavy-hitting tech hubs.
Ironically, Ofer is the head of Israel Corporation Ltd., which operates oil refineries in Israel. Ofer told the Times that he's got a much broader view and plan than just getting 100,000 electric cars on Israel's roads by year-end 2010 (a target that Better Place has already set). "If it were just Israel, I'd be cannibalizing my refinery business," Ofer quipped. "I'm not so concerned about the refineries, but building a world-class company."
Taxes on cars in Israel are heavy, with Israeli motorists expecting to pay about 100% in duties for foreign cars especially. Like that $20,000 Fiat? You'd better be ready to finance $40,000.
With this new government-backed plan, however, tax breaks are promised through at least 2015, which should do a ton to catalyze demand. When all is said and done, Agassi says that he expects the "phone-plan" cars to cost about half of what a gas guzzler sucks from your wallet.
Israel's strapped for resources, from land to fuel. In geopolitics and economics, the New Jersey-sized country is in a peculiar spot. Israelis don't need anyone to tell them this, as elder statesman and current President Shimon Peres said this week: "Israel can't become a major industrial country, but it can become a daring world laboratory and a pilot plant for new ideas, like the electric car."
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