General Electric, (GE) which is eager for a big slice of the emerging electric car market, said Wednesday it's teaming up with a Silicon Valley startup, Better Place, to promote their charging station and battery-swapping businesses.
GE wants to find homes for its newly introduced charging equipment, and Better Place needs a partner with buff financial muscles to help it build a network of charging and battery replacement stations around the country. The two companies, which didn't disclose the financial terms of their agreement, plan to work together on marketing and service programs targeting consumers and fleet owners.
GE moved into the electric car market when it unveiled its WattStation charging equipment in July. The tech giant hired Yves Behar, the well-known industrial designer behind Jawbone's Bluetooth headset and the chandelier sculpture installed at JFK International Airport, to give WattStation a sleek, clean look that sets it apart from the boxy, grimy feel of today's gas stations.
The partnership is significant for Better Place, which has trumpeted its ambitious plan to build a network of car charging and battery-swapping stations around the world. Better Place is rolling out pilot projects in Israel and Denmark, where it has gotten handsome financial and regulatory support. Better Place also has announced plans to build stations in the United States.
The Pros and Cons of Battery Swapping
Better Place wants to offer battery replacement services because it believes consumers might not want to pay for and own the expensive lithium-ion batteries, which are the primary reason that electric cars coming to the market are so much more expensive than your typical family sedans. The idea is that consumers will pay for a service plan where they can stop by any Better Place station to trade in depleted batteries for fully-charged ones. Better Place will then re-charge the empty batteries, often at night when electricity is cheaper, and offer them to customers the next day.
The battery swapping seems both creative and impractical to many people in the electric car industry, however. There is no standard size or placement for the bulky lithium-ion battery packs, so a Better Place station will have to stock up on different battery brands and be able to install them quickly. The company has designed a robotic system that it says can replace batteries efficiently. It has signed an agreement with the Renault Nissan Alliance, which plans to roll out electric cars and make their batteries available to Better Place's stations in Israel and Denmark.
But the need for the robots and stations to recharge depleted batteries means Better Place will need a lot of money to make its business plan a reality. The company raised $350 million earlier this year: Investors included HSBC Group, Morgan Stanley Investment Management and Lazard Asset Management. Better Place also previously raised $200 million to help build a network in Israel and €103 million ($135.8 million) from Denmark's utility, DONG Energy, for the pilot project in that country.
Competing to Recharge
Charging electric cars like you would at a gas station today is a concept that is easy to grasp for consumers. In fact, while Better Place is out raising the hefty sums and lining up partners, other companies have been rolling out charging stations across the country.
Coulomb Technologies, another Silicon Valley startup, has installed charging stations in many states, mostly on the West and East coasts. The company also sells chargers for use at home.
Some market analysts believe most electric car owners in the United States will do most of their refueling at home. Residential charging gear will represent 64% of the 974,000 charging stations to be installed in the United States by 2015, predicted Pike Research. By comparison, in Europe and Asia, which have fewer single-family homes, residential charging spots will make up on 35% of their markets.
Globally, 4.7 million charging points will materialize from 2010 and 2015, Pike said.
GE said it will work with Better Place to finance 10,000 batteries to "help bring the first 10,000 electric cars to consumers" in Israel and Denmark, but it didn't offer details on the plan. The two companies also want to market their equipment and services to fleet owners in the U.S. and other parts of the world, likely by offering financial and other incentives to make a switch to electric cars more affordable.
What is Short Selling?
Make a profit when stocks prices fall.View Course »