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A Better Place?



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Cleaning up the half-truths and half-baked columns of New York Times columnist Thomas Friedman’s (Number Two on the Wall Street Journal’s “Most Influential Business Thinkers” list!) is a full-time job here at Planet Gore.

In his Wednesday column, “While Detroit Slept,” Friedman thinks he’s found “Car 2.0” — the next generation of automobility — even as Detroit tries to save the “mindless” Cars 1.0 business model.

Friedman extols the virtues of Better Place, a company founded by Silicon Valley software guru Shai Agassi (who has no automotive background) and backed by Israeli industrial magnate, Idan Ofer, who has made millions in the oil refinery business (Israelis are, understandably, obsessive about oil independence).

Better Place borrows its business model from the cell phone industry — building an electric infrastructure (plug-in and battery stations) then selling subscriptions to customers who buy or lease vehicles which then have access to a nationwide network of charging and battery exchange stations. To this end, Better Place has contracted with a Renault/Nissan partnership to produce the electric vehicles, just as, say, AT&T contracts with iPhone in its cell service.

Better Place, Friedman says, is “developing a real world alternative.” But what Friedman doesn’t tell his readers is that Better Place is counting on massive, artificial government subsidies.

If the business model is so great, why does it need public welfare? Cell phone startups didn’t. Neither did Steve Jobs’ iPhone innovation which revolutionized the music industry — and which Friedman mindlessly cites as an analogy.

The Israeli government (Tel Aviv is Better Place’s first test bed) is a major partner of Better Place, as are other government entities that have signed on to the concept, including the San Francisco Bay Area and the state of Hawaii. All will provide government incentives to buy vehicles, tax breaks for businesses to provide electric outlets, and exclusive contracts for public transportation, city-owned vehicles, and government buildings.

And there’s more. The French government has spent a whopping $550 million to subsidize Renault’s production of the electric vehicles Better Place needs.

Friedman sneers at “Car 1.0,” but Detroit didn’t go begging to Uncle Sugar to create it. It was a business model born of market competition — not government guarantees.

Friedman also doesn’t mention the considerable logistical hurdles the project faces. Jerry Flint, an automotive analyst at Forbes, says the project looks like “another nutty idea. Electric cars have limited range and take a good while to recharge. I am still skeptical about how quickly manufacturers will solve the lithium-ion batteries’ problems.”

Indeed, one of the linchpins of Agassi’s plan is the battery stations where drivers can simply swap in a new battery and be on their way. That’s an (ahem) ambitious scenario given that mass production of high-performance, affordable battery packs doesn’t yet exist.

But, of course, Friedman counts on government funding battery development as well.

Finally, there’s what automotive engineers call “range anxiety” — that queasy feeling of not knowing when your battery will run out of charge. Cell phone users experience it all the time. But if their phone runs out of juice in the middle of nowhere, they simply plug it into their car. But if your car runs out of juice . . . what do you plug it into?

I’d feel more comfortable if Better Place was wrestling with these questions just as the cell phone entrepreneurs did: By tapping millionaires like Thomas Friedman to invest in their companies — not by holding up taxpayers.



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