Face Off: GM and Better Place on Electric Car Services

The first mainstream cars that plug into the electric grid are not expected for another year—but the battle to provide charging and battery services to those early adopters is already heating up. The tension between two companies which might provide those services was palpable on Monday during a panel discussion in Palo Alto, Calif., entitled “Electric Cars: Transformational Change or Niche Trend?” organized by German American Business Association of California (GABA). General Motors and Better Place both believe they are best suited to helping plug-in cars owners maintain and charge their batteries.

Jason Wolf, head of Better Place’s California office, said the purchase of the electric car—what he called a “device”—will be separated from the necessary charging and maintenance of the batteries, much the way consumers buy a cell phone, but sign up for wireless service through a carrier. “A battery is like eight years worth of gasoline. When you walk into the dealership, you buy your vehicle now, you don’t buy eight years worth of gasoline. You need a business model that takes the ownership of the battery and provides it to you the same way Chevron provides your gasoline,” said Wolf. He believes consumers will also need “a smart network of charging infrastructure including the ability to swap that battery.”

Follow the Money

Better Place has signed a deal to provide those services for future Renault electric cars in Denmark and Israel. But will other carmakers warmly embrace Better Place’s model? Not according to panelist Byron Shaw, who manages GM’s advanced technology office in Palo Alto. “If there’s money to be made on batteries, we’re going to be one of the competitors trying to make money on it.” Shaw said that GM has been “on the short end of the stick for quite some time” when it comes to providing energy and other service for gas-powered cars. That could change with electric or plug-in hybrid cars, like the upcoming Chevy Volt. “There’s going to be a lot of competitors in the space and we certainly intend to be one.”

Shaw disagreed with the cell phone analogy, saying that there’s a big difference between a $100 cell phone, and a vehicle, which costs at least tens of thousands of dollars. He believes that the carmaker is best positioned to provide all the post-purchase services. “Do you want another bill from another service provider that has nothing to do with your vehicle? Buying the battery from General Motors with the vehicle and the financing agreement in one integrated package is the advantage an OEM (original equipment manufacturer) provides.”

GM’s Shaw pointed to the company’s OnStar crash notification system as a platform that could be used to help plug-in car owners monitor and maintain batteries. Wolf of Better Place responded, “OnStar is an example, I wouldn’t go as far to call it a good example, of the things a car can do once it becomes a network device. It doesn’t matter what the propulsion is. But when you start thinking about networks connected to the vehicle, you have a lot of capabilities.” Wolf specifically mentioned entertainment services and “advertising industry needs” that a networked car could provide. He added, “In looking at how industries cannibalize and change themselves, it doesn’t usually happen from the incumbents.”

A Better Way: Open Charging

The two other panelists stressed the need to build open charging systems that wouldn’t necessarily require services from either the carmaker or a dedicated third-party service. Mike DiNucci, vice president of strategic accounts for Coulomb Technologies, which sells networked charging stations, said, “We strongly believe that any system that’s going to be adopted by the mass market has to be an open system. There has to be interoperability. You can’t lock people into a particular type of technology or a type of subscription model, or it’s not going to work.”

Tom Gage, CEO of AC Propulsion, which has been making electric drive systems since the 1980s, took the concept of open-ness one step further. “The key to making electric vehicles useful is to allow people to charge anywhere, because electricity is the ultimate commodity that exists almost everywhere that people live.” AC Propulsion’s systems allow drivers to tap into that existing infrastructure using on board chargers as part of the car. “All you need is an extension cord and maybe some plug adapters to take advantage of electricity where you find it.”

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  • alancamp

    It seems ‘Better Place’ is trying to use the printer/toner business model with electric cars. Offer the printer at a reasonable cost, then rip you off for toner cartridges long tern. That’s not going to work with electric cars.

    Most people who look for an electric car are looking to ‘avoid’ the ongoing cost of buying gasoline. Period! The environmental benefit is just a perk. So trying to charge a fixed rate of est. $100/mo to rent a battery, and you still pay for your electricity makes no sense at all. I am not going to say that some consumers are not stupid, but most hybrid/electric car consumers might be thinking a bit more about their purchase.

    It seems greed is raising it’s ugly head once again. Batteries should be part of the car, just like a gas tank. The consumer pays to refill the batteries/gas tank when needed. No third party companies should be trying to make profit from the batteries/gas tank.

    Charging should be available and provided by our power companies who already have power lines along every roadway and every light pole in the country, along with companies offering charging in their parking lots and parking garages. This is one way for power companies to progress with technology. Unlike the post office who seems to have never thought ’email’ would really catch on, and didn’t bother to offer a @usps.com secure email address.

    This is not rocket science, but as always, greed tends to complicate things and slow progress.

  • crookmatt

    I agree completely with the last part of the model that anything other than an open charging type system will not work. GM could offer battery charging/swapping in addition to other competitors much like car maintenance can be completed by a dealer or 3rd party, but if people know they will be obligated to purchase battery services from GM with no option to use a 3rd party, they’ll probably avoid buying the car in the first place.

    Most consumers are smart enough to know that they’ll get the best price in a competitive market. If GM thinks they can preclude consumers from using 3rd party services through some type of engineering of the Volt so that only GM can service/swap/charge the battery-they’ll end up finding that few people will be willing to buy the Volt int the first place.

  • tsport100

    There is probably a niche for Better Place to start with to ‘finance’ batteries while EV Li-ion battery production capacity builds up and a 25 kWh pack costs $10,000.

    But lets face it, as prices drop (the CEO of LG/Compact power says 50-75% price reduction in 5-10 years..) the window of opportunity will close for Better Place as the same pack (which lasts 10yrs + before reducing to 80% DOC) will cost as little as $2,500 by the time it’s due to be replaced.

    If EVs can be engineered to accept battery packs of various sizes (not guaranteed as doubling capacity also doubles weight) there may be a longer term business ‘renting’ larger packs for weekend trips.

  • Mr.Bear

    I think there is a niche market for “battery rental” just as there is for “car rental”. Say I want to drive cross country. I could drive from rental station to rental station and exchange my battery along the way. When I get back home, I get my original battery back.

    I think open charging and home charging are the best long term options too. It’s dumb to think someone will spend $35k – $40k for a car that the so they won’t have to put gas in it and then pay a $100/month least on the battery for the rest of it’s life. Hell, I’m putting about 250 miles a week on my Prius and it only costs me $50 a month in gas. Gas would have to hit $5 a gallon for me to spend $100 a month in gas. And then I’m still coming out ahead because I still paid $10,000 less initial cost for the car.

  • balloon boy

    If you own the battery, you won’t want to switch it – how would you know the new one is good? And if you don’t switch, how can you get past the range problem with EVs? “Fast charging” with a plug that carries enough juice to power 10 houses at a time is dangerous and would take down the electric grid.

    I think the Coulomb guy is right – EV charging has to be an open network, like ATM machines or something. Maybe you have an account with one charging company and pay a little fee if you use another one, but you can still charge every where. I heard Better Place will go with that concept too. Why wouldn’t they? If not, they’d just be limiting the number of customers they can serve.

    Can’t wait to get my EV!!

  • perfectapproach

    They don’t actually seem to be arguing at all, other than WHO is providing battery services. They both agree that charging should be an open-infrastructure model… people can charge anywhere, and anyone can charge anything for their charging services.

    They both agree that there needs to be a battery-replacement business model. Better Places thinks it should be something like a service contract, whereas GM puts it in the price of the car/warranty.

    They don’t seem to mention that both can co-exist. Look at the same business model for laptop batteries. Dell sells laptops, with batteries. They sell replacement batteries. They warranty their own batteries.

    But other companies sell Dell laptop batteries too… and if these batteries were super expensive, I’m sure someone would finance them.

    Why can’t GM sell their batteries, and companies like Better Place sell batteries too? Who cares how they get the money, whether it’s in the price of the car, or in a monthly rental payment.

    1) Dude buys a car, with a battery.
    2) Dude’s battery goes dead.
    3) Dude can either:
    — a) Get another battery, under warranty.
    — b) Buy a battery from the same people he bought his car from.
    — c) Rent a battery on lease/contract/rental agreement from Better Places.

    What’s the big deal?

  • Jessica

    I was really excited when I heard about Better Place’s idea and was surprised to read the negative comments here. Better Place immediately gets around two huge problems with rechargeable batteries:

    1. How can I use an all electric car for longer trips without pulling over to charge 4+ hours at a time every 50-100 miles?

    – You could barely drive from SF to San Jose one way on battery with a Volt. A Telsa gets you about 200 miles, or under 4 hours of highway driving. I can drive a lot further than 200 miles in a day. If you REALLY want to use your car without being constrained to 4-6 hours of downtime in charge, you need Better Place.

    2. Let’s say you’re grocery shopping and your battery is low. Let’s also say the grocery store (or other similar place, ie mall) has a charging station. Do you feel safe popping open your AC plug cap and charging your car unattended for hours?

    – I don’t because in the same principle I wouldn’t be comfortable leaving my gas cap off and leaving the area. People will screw with your car in general and leaving something like an AC cap open in a public area is asking for it. I also don’t think any merchant is going to hire an extra person to keep an eye on your car. The Better Place system avoids this obstacle, too.

    “If you own the battery, you won’t want to switch it – how would you know the new one is good?” – I think this can be solved with well stocked charging stations and constant testing.

    “Fast charging” stations, if they do/will exist will still take hours. We can’t figure out how to 100% power up a cell phone in under 3 hours, so I don’t hold a lot of hope for the car version of this.

    I still support Better Place, because their idea really solves these problems. Hopefully I’ll see it happen in my life time.

  • frank helemp

    Good for GM.

    GM is now the leader on electric technology.

    Funny how all the anti-GM soCal toyota types are all upset.


  • everquest 2 platinum

    If your battery, you don’t want it, how do you know a new one? If you don’t switch, how can you let the problems of the past and electric car? “Quick charging,” to enough fruit juice in power and building is dangerous, write down the electric company.

    I think this guy is correct, electric charge is discussed.coulomb open network, such as ATM machine or something similar. Maybe you have an account, a charge, small companies, if you use another person, but you still can collect all of the place. I heard the best place to and the concept. Why not? If not, they would limit their customer service.

    I can’t wait to exposure! !

  • TheBear

    Get Real. GM had the lead in 1986 with the EV-1 and is so far behind the cutting edge now that they are in reverse. They just took billions of our tax money, just so they could stay alive. 5 years ago- 2004 was GM’s best year ever with record sales. but they still lost $500,000,000. If you think they are the best, then go back to reading your comic books and drink another six pack of Bud.

    It is really strange how GM’s cars and trucks had some of the worst mileage in all of the industry and all of a sudden, with a government check in their pocket, their mileage on all vehicles jumped 20%. Cobalt in 2006 had mileage of 24 city and 30 hwy. In 2009 they have listed 32 city and 38 highway. Yeah Right.

    If you want to see the leader in AC cars look at AC Propulsion or the Tesla.

    GM is Great Mistakes by Greedy Mothers.