Published on August 8th, 2011 | by Adam Hurwitz13
First All-Electric Subscription Plan: Car 2.0 Pricing
August 8th, 2011 by Adam Hurwitz
“August marks the true premiere of electric vehicles to the world”
Recently, Tesla, a trailblazer in revolutionizing the current era of electric cars announced the end of production of the original Roadster. Tesla is phasing out the Roadster, which cost over $100k the past few years, and phasing in its new Model S, which will have a version as low as $57,400. As Tesla spokesperson Khobi Brooklyn explained in a Fast Company article titled “The End of an Era” that the roadster made huge advances in the all electric vehicle (EV) industry as a whole by proving that an EV can outperform traditional combustion vehicles as well as by moving along the research and development process to drive down the cost of EVs. This transition towards the cheaper and more family-oriented 4-door Model S represents the larger industry move towards electric vehicles for the mass market, not just the rich sports car enthusiasts that also happen to care for the environment.
Start of a Revolution
“20%-35% cost savings in annual expenses with EVs versus combustion engines”- Better Place
Better Place is at the heart of the movement for affordable EVs with the technology we currently have by separating the ownership of the extremely costly lithium battery with the vehicle. One of Better Place’s slogans is “we don’t make electric cars, we make electric cars convenient.” As explained in my previous article, Car 2.0 Overview, this new infrastructure of battery-swapping stations allows buyers of EV vehicles to pay significantly less for the vehicle because the user pays for the amount of usage, similar to how a traditional driver pays for gas. Since the battery is separated from the vehicle and no longer needs to be built within the car, the user does not have to worry about the high upfront costs that come with a lithium battery.
A similar example is how cell phones are sold. The cost of a cell phone is heavily subsidized by the companies selling them because they do not make money in selling the actual device,.. they make money off of people paying a monthly subscription. When you purchase a traditional combustion vehicle, you pay for gasoline as you need it, not the entire oil well, Shai Agassi points out (inventor of the battery swapping system). He claims these innovations in the production, operation, and business models of electric vehicles are arguments against the high costs and impracticality critics cite in an all-electric solution.
Back to the cell phone analogy: One may only pay around $100 for a phone that would normally cost $500 without agreeing to a 2-year term. Many may complain about the two-year term, but at the same time, it is rare to come across a person these days without a cell phone. According to this system of subscriptions, Better Place will make EVs affordable to the masses in a top-down business strategy, as opposed to companies like Tesla, that started out with a very costly solution and are trying to work their way down.
Big or Bust?…
August marks the true premiere of electric vehicles to the world with the first commercial launch of Better Place to the world. In May, Better Place released its subscription prices for its August launch in Israel, claiming a 20% cost savings in annual expenses with EVs versus combustion engines. This will be the first commercial launch of Better Place; all of the other locations across the world — Denmark, Japan, Hawaii, the US, and so on — are conducting feasibility and taxi tests, or still planning their launch timeline, like in Australia, where there will be massive launch ($100 million of the federal government’s money has already been funded in order to prepare smart-grids) and Renault, another true innovator with a “cradle to cradle” approach to operating, will be supplying the 115-mile range EVs.
–>> Continue Reading about the Better Place Launch in Israel on Page 2
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