Is Better Place's Shai Agassi Fudging the Math On Cost of Driving Electric?

September 28, 2009

Shai Agassi, the founder and CEO of Better Place, is by all accounts a supremely charismatic entrepreneur. He has raised hundreds of millions of dollars to wire Israel with electric-car recharging stations and battery quick-swap facilities, and will offer to sell his customers as many miles as they care to drive in Better Place cars at a fixed rate, just like a cell-phone service plan.

But like Elon Musk of Tesla Motors, who also occasionally says things that aren't quite true,  Agassi could use a bit of basic fact-checking. He claims that electric cars offered through Better Place will cost $4,500 to $7,500 less than equivalent gasoline or diesel cars, and that the company's service plans based on mileage are no more expensive than gasoline.

An analysis on our sister site shows that Agassi is fudging his math on two counts.

First, the cost of the car doesn't include the battery pack, at a mere $15,000 or so. And, second, it includes government subsidies to encourage adoption of electric cars. To be fair, that's a tactic also used by Tesla Motors and Fisker Automotive in pricing their cars.

Better Place customers will buy the car, but they won't own the battery; they'll simply pay for the miles they drive, which includes the electricity, use of the battery pack, and access to the charging stations and quick-swap facilities.

The math works when gasoline is $7.50 a gallon, which is about right for Israel. We haven't analyzed what happens when government subsidies end, or how much more it costs if the car customer could buy the battery outright.

[UPDATE: We were subsequently contacted by Julie Mullins of Better Place with a clarification: Those pricing numbers were hypothetical scenarios used to show that different mileage plans would be available for different driving needs. She attributes the confusion to the original interview having been translated from the German, meaning some of the semantics may have been lost.]

As always, a lot of the costs depend on what assumptions you make about how long you keep a car, how much you drive--and what you compare it to (2010 Toyota Prius at 50 miles per gallon or, say, 2010 Lamborghini Gallardo at one-third of that?).

We're all for the arrival of electric cars, mind you. At least some of them--we're thinking of you, 2009 Tesla Roadster--are hellacious fun to drive. But when looking at the numbers, it's best to keep in mind the old adage: Your mileage may vary.

[Reuters via GreenCarReports]

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