Electric Cars Setting Out for Australia (WSJ)

Electric Cars Setting Out for Australia | View Web
10/29/2008
Wall Street Journal - Online
TOKYO -- Even as tumbling gasoline prices threaten to undermine consumer interest in alternative-fuel cars, Better Place, a California-based electric-vehicle company, aims to raise one billion Australian dollars (US$668.5 million) to develop an electric-car network in Australia.

It is the company's biggest effort yet to wean drivers off gasoline-powered cars.

Under the plan, Better Place will work with Macquarie Capital Group Ltd. to attract investors to build recharging stations, with the goal of mass marketing the first electric cars by 2012. It also signed on Australian utility AGL Energy Ltd. to supply electricity from renewable sources like wind to power the network.

No auto maker has been named in the agreement. But the alliance of France's Renault SA and Japan's Nissan Motor Co., which is developing an electric car, is considering whether to provide vehicles to the Australian partnership.

Launched in 2007, the $200 million venture-funded Better Place is seeking to join forces with car makers, governments and investors to jump-start an electric-car industry. The Better Place concept is to create an electric-car business similar to the mobile-phone industry. Drivers would pay for access to battery-recharging stations and for the miles they drive -- similar to the way a mobile-phone user is charged for minutes.

It is already building electric-car networks in Israel and Denmark, where it plans to begin mass marketing electric cars in 2011. Australia would be the largest effort by Better Place to steer a country off oil dependence.

"Our network buildout in Australia will demonstrate that the Better Place model works in all countries, regardless of size," said Shai Agassi, chief executive and founder of Better Place.

The announcement comes at an uncertain time for alternative-energy projects like Better Place. Much of the excitement this year surrounding eco-friendly vehicles such as fuel-cell, hybrid and electric cars stemmed from soaring oil prices. But oil prices have fallen in recent weeks to less than $70 a barrel from a high of $147, stripping away one of the primary motivations for governments, investors and consumers to support alternative-energy efforts besides energy security and environmental concerns.

With credit markets frozen amid the global financial crisis, it may also be difficult to generate the funds for such large infrastructure investments like electric-car networks.

Indeed, earlier this month, Tesla Motors Inc. announced it was cutting staff and delaying the introduction of its second battery-powered vehicle, the Model S, until 2011. The move by the Silicon Valley electric-car start-up reflects tougher financial markets.

Still, Mr. Agassi remains optimistic about his electric-car project. Better Place expects the operating costs of electric vehicles will be about six to eight cents a mile, the rough equivalent of $1.50 per gallon of gasoline, he said.

Mr. Agassi said building the network will be cheaper because construction prices are falling amid the economic slowdown, adding that oil prices will eventually increase when the economy recovers.

"So we might be in the best position ever," Mr. Agassi said.