The Future of Transportation? Shai Aggasi’s Vision

via: Wired Magazine

Agassi’s interest in energy is new. In 2005, he joined Young Global Leaders, an invitation-only group for politicians and businesspeople under 40. The four-day induction seminar was held at the Swiss ski resort of Zermatt. Between lectures, YGLs like Skype cofounder Niklas Zennström and NBA star Dikembe Mutombo pledged to find ways to “make the world a better place” by 2020. Agassi’s assignment was the environment, and he quickly focused in on climate change.

Most left the event and just poked around in their own industries, looking for small tweaks and improvements. But Agassi wanted something bigger. Back home in Silicon Valley, his day job involved coaxing SAP into the Web 2.0 era. But after Zermatt, his nights were devoted to dinners with energy experts, books on energy policy, and sessions on Wikipedia, learning everything he could about the carbon economy. Getting off oil was the key, he decided. But how? He started by looking at cutting energy usage in the home, then moved to a more tempting target: transportation. Was hydrogen the answer? What about embedding power in the street—like slot cars? Could more be done with biofuels? Agassi kept a running file on his home PC and began working on a series of white papers.

The problem, he decided, was oil-consuming, CO₂-spewing cars. The solution was to get rid of them. Not just some, and not just by substituting hybrids or flex fuels. No half measures. The internal combustion engine had to be retired. The future was in electric cars.

This was hardly an original insight; electric cars had been the future for over 100 years. In the late 1800s and early 1900s, the Electric Vehicle Company was the largest automaker in the US, with dealers from Paris to Mexico City. But oil, in the end, supplanted volts on American highways because of one perennial problem: batteries. Car batteries, then and now, are heavy and expensive, don’t last long, and take forever to recharge. In five minutes you can fill a car with enough gas to go 300 miles, but five minutes of charging at home gets you only about 8 miles in an electric car. Clever tricks, like adding “range extenders”—gas engines that kick in when a battery dies—end up making the cars too expensive.

Agassi dealt with the battery issue by simply swatting it away. Previous approaches relied on a traditional manufacturing formula: We make the cars, you buy them. Agassi reimagined the entire automotive ecosystem by proposing a new concept he called the Electric Recharge Grid Operator. It was an unorthodox mashup of the automotive and mobile phone industries. Instead of gas stations on every corner, the ERGO would blanket a country with a network of “smart” charge spots. Drivers could plug in anywhere, anytime, and would subscribe to a specific plan—unlimited miles, a maximum number of miles each month, or pay as you go—all for less than the equivalent cost for gas. They’d buy their car from the operator, who would offer steep discounts, perhaps even give the cars away. The profit would come from selling electricity—the minutes.

Agassi will sell his battery-powered cars cheap and make money off drivers' electricity purchases. Photo: Joe Pugliese

There would be plugs in homes, offices, shopping malls. And when customers couldn’t wait to “fill up,” they’d go to battery exchange stations where they would pull into car-wash-like sheds, and in a few minutes, a hydraulic lift would swap the depleted battery with a fresh one. Drivers wouldn’t pay a penny extra: The ERGO would own the battery.

Agassi unveiled the outline of his vision for the crowd at the Saban event: a new kind of infrastructure, with ubiquitous charge stations, that was not only simple and logical but potentially profitable, too. As he talked, he read the body language of the audience—they were leaning forward, they were nodding—and he fed off it, layering on details. A country like Israel, he told them, could get off oil by simply adopting his new business model. No technological breakthroughs were necessary. No new inventions. It was as if he’d discovered a trapdoor beneath both the gasoline industry and the auto industry, a combined $3 trillion market. It sounded easy and unavoidable. Even Daniel Yergin was amazed. Shai Agassi had stolen the show.

A week later, Agassi was in bed when his phone rang. He was asked to hold for Shimon Peres. At first he thought it was a joke.

“Now what?” said the familiar rumbling voice on the other end of the line. Peres said he had been thinking about Agassi’s speech since returning to Israel. He wanted to know what Agassi was going to do about it.

“What do you mean?” Agassi asked.

“You spoke so beautifully, you have to make this a reality. Otherwise, it will remain a speech.”

Electric Avenues

AutoOS, the Better Place operating system, would transform the transportation grid. Here’s how.

• 1. A special key fob linked to the car indicates the status of the battery. If the logo is throbbing blue, the car is fully charged.
• 2. The driver unplugs and heads out. The software analyzes the first few minutes of driving and guesses the destination based on past history: “Work?” it asks. The driver speaks a response and the system determines how much energy is needed for the day.
• 3. During the commute, the location-aware system finds and displays three open parking spaces near the office that are equipped with Better Place charging spots.
• 4. An automatic arm extends to plug into the car. The spot then communicates with the control center, which anticipates the driver’s energy needs so as to allocate power economically. It might, say, limit consumption during expensive peak hours. The driver gets a text: “80 percent charged.”
• 5. An unexpected meeting comes up. The driver enters a new route, and AutOS determines there is insufficient charge to get there. The driver orders a battery swap.
• 6. AutOS finds the most convenient battery-exchange location and books a bay. The old battery gets lowered onto a hydraulic plate, and the car moves forward on a car-wash-style track. In five minutes, a fully charged battery is in place.

By early summer 2008, Agassi had two countries ready to roll out the plan, a major automaker producing the cars, and $200 million in committed capital. He had launched the fifth-largest startup of all time in less than a year.

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Aggasi’s plan to electrify the private transportation system is nothing short of ingenious.  It is a win-win game for governments, car owners, for the environment, for the economy and for Aggasi’s company.  True many details must be worked out properly for such a deep change to take place. But it seems entirely within reach. Read the rest here