Transcript: The Better Place Model for Breaking Oil Dependence

THE CNA CORPORATION

THE BETTER PLACE MODEL FOR BREAKING OIL DEPENDENCE

WELCOME AND MODERATOR:
SCOTT PUGH,
SCIENCE AND TECHNOLOGY DEPARTMENT,
DEPARTMENT OF HOMELAND SECURITY

SPEAKER:
MICHAEL GRANOFF,
HEAD OF OIL DEPENDENCE POLICIES,
BETTER PLACE


MONDAY, NOVEMBER 10, 2008


Transcript by
Federal News Service
Washington, D.C.

    SCOTT PUGH:  Looks like most people have found a place to sit, so we’re going to go ahead and get started.  I’m Scott Pugh, I know a lot of you and hope to meet the rest of you.  But a couple of announcements.  First of all, I’d like to pass on – the next energy conversation will be right here, same place, same channel, on 8 December.  And that’s going to be Todd Ramsey, who is the vice president for transformation at IBM, and he’s going to talk to us about how going green saved IBM, so that should be good.  I want to recognize the organizers of the Energy Conversation, Mitzi Wertheim and her helper Sarah Minczeski, who are here tonight.  So round of applause for them, please. 

    (Applause.)   

    And, you know, this event is sponsored by the Department of Defense, and primarily Al Schaefer, who is at the Office of Acquisition Technology Logistics, but I think he’s over a lobster dinner in Annapolis tonight so he had to make a decision, so.  But anyway, I want to thank you all for being here tonight.  I realize it’s the night before a federal holiday where we take time to stop, tomorrow, and remember our veterans.  I’m not going to ask for a show of hands, but I know that a lot of veterans and active duty folks are here tonight.

    If this is your first time here, the Energy Conversation meets about once a month.  We talk about a variety of energy topics, everything’s on the table, and we’re glad that you could be here with us.  All you have to do is go to Google and look up Energy Conversation, sign up for the e-mail announcements and get on the list and you can come back any time.

    When you talk about energy in – you know, anywhere, you’re talking about fossil fuels, nuclear and renewables.  And in America we have a serious problem that we all know about with our dependence on oil.  Basically, the problem we have is, you know, in America we’re using oil about three times as fast as we are producing it and importing 65 percent.  And I think at this point, right now, the people in the audience who know me are getting nervous that I’m going to start talking about oil, because they know I could talk about oil for quite awhile.  But I just – I won’t do that.

I want to make one point, though, is that the U.S. and the international projections that say we’re going to go from the 85 millions barrels per day that we’re using right now to 120 million barrels a day in 2030.  They don’t always tell you that the world’s oil fields that are in production today are declining at somewhere between five and 9 percent a year.  And when you do the math on that, what you can show is that to get to that 100 million barrels a day by 2030, we basically have to find about nine new Saudi Arabias in the next 22 years.  That may happen, but personally I think that’s going to be very difficult for us to pull off as a world.  And that’s – Jim Schlesinger, who is a former secretary of defense, secretary of energy, is a guy that I first heard explain that that way.

    I asked Mitzi tonight if I could introduce the speaker because I’m somewhat familiar with Project – or, Better Place, it used to be called Project Better Place, and I’ve met our speaker before.  You know, electric cars are cheap and easy to build today.  The problem is that a battery that will make the car go far enough and fast enough and not cost too much is not so easy to build, and in fact it’s a very difficult problem that some of the best scientists and engineers in the world are working on right now.  But they’re against some basic limits of physics and basically the fact that, you know, a gallon of gasoline has as much energy as a ton of lead acid batteries.  And so I’m hoping one of the things that our speaker will explain tonight is, what happened to the $300 million prize that John McCain was promising for breakthrough battery technology?

    Project Better Place is a very interesting company.  They got three goals: sustainable transportation, global energy independence and freedom from oil.  So those are not too unimpressive goals.  They have a, the CEO and president of Project Better Place is a guy named Shai Agassi.  And we asked Shai to come talk to us tonight, but, you know, the basic problem with Shai is that he’s young, he’s intelligent, he’s articulate and usually the women say that his movie star looks are sort of distracting.  So, you know, we asked Better Place if they had someone else who might be a little bit, you know, slightly older and slightly more average in appearance, and – (chuckles) – and basically more believable.  They said no, but they did have another guy, so I’m very pleased that we have Michael Granoff here with us tonight. 

    You’ve got his bio there.  Michael spent about 12 years doing investment in the primarily life sciences and biotech area, and he’s got one of the coolest job titles that I’ve ever heard of.  His job title is: Head of Oil Independence Policies for Better Place.  And I think, how cool would it be if we had a head of oil independence policies for America in the next administration?  So without further ado, I’d like to have a round of applause for Michael. 

    MICHAEL GRANOFF:  Thanks.  Is this working?  Okay.  I’m going to not go up to the podium if that’s all right with people.  Hope it’s not too distracting.  (Chuckles.)  Mr. Shai is heavily in demand, so some others of us have attempted to learn to tell the story in a way that is provocative to people, and I hope that you’ll find it so tonight.  I really want to thank Scott for introducing, and as he’s mentioned, we’ve been together a few times this year, including in Israel, which was great, and I really want to congratulate Mitzi and Sarah and everyone else who helped put this together.  This is really quite an impressive forum that you have, and it’s a little intimidating to look at some of the previous speakers.  I’ve never run the CIA or have any of those Ph.D.s that many of your other speakers have had, but I hope that I can share with you a story that has a lot of relevance to the very interesting times that we find ourselves right now. 

    One of the things I want to emphasize, at Better Place, first of all, we’re a company.  We’re a startup company intending to be for-profit, but we’re really also a mission.  Everybody who’s involved in the company, from Shai, the founder and CEO down through everybody who’s come on board has come on board not because they want to be part of a cool startup but because they really believe in the mission, primarily of ending oil dependence.  But as you’ll see and as many of you, I’m sure, know, along with that are many, many other ancillary benefits that we’ll talk about.

    So the way this all began, I’ll tell you a little about Shai’s background and get into how this started.  He was, he’s actually six months older than me, so he’s not – but despite that, I like to think he’s still pretty young.  He, in his 20s was a software, a serial software entrepreneur.  Started a number of software companies, sold them, started another one, eventually sold a very sizable one to a company you’ve probably heard of called SAP, which is one of the largest enterprise software companies in the world, based in Germany, and he went to work for SAP.  He moved from Israel, where he grew up, to Silicon Valley and headed up their operations out there.  Became the president of products for SAP and at the age of 37 was told he’s going to be the next CEO of SAP.  And this is really the career that he had dreamed of, this was the job that he had wanted, and so he felt quite fulfilled in that.

But he also is a very curious person and he got involved in a group called Young Global Leaders, which is basically the under-40 set of Davos, and in 2005 they convened and a member stood up and said, you know, we are all under-40, we’ve all made our fortunes, and we all have a tremendous talent to offer.  We should each think of a goal to how we’re, in a concrete way, going to make the world a better place by 2020.  And Shai thought seriously about this and thought about many aspects of that very broad question and concluded, really, that oil dependence was the most serious Achilles heel facing the industrialized world.  And the reason is because, as you all know, there are multifaceted problems.  As Scott said, we’re not going to have enough at the rates that we hope we will continue to grow.  And we have carbon issue and we have the geopolitical issues associated with oil, and pollution and everything else that goes with that.

    So he thought that – and this is nights and weekends he would read all he could and try to come up with a formula by which you could take a country off of oil in a scaleable way.  And there were really three criteria that he put in place.  He said it had to be something that scaled, something you could do on a small scale but you could also expand to an infinite scale.  It had to be something that was market-driven, that was not a government mandate, because as we all know a government mandate won’t ultimately succeed in solving the problem if the economics aren’t there. 

So the economics had to be there for the market to drive the solution, and it had to be something that was not based on new technology.  It had to be existing here and now technology, because there are so many things that you have to overcome to succeed in this that one of them, in his mind, couldn’t be – and hopefully, a few years down the road this experiment will work out, and then the technology risk will be gone.  He said, the technology risk has to be taken off the table upfront.  And as Scott said, electric cars are not new technology.  If you hailed a cab in New York City, in 1900, it was an electric car. 

    As we all know, the world didn’t involve in the favor of electric cars in the 20th century because of the availability of cheap, abundant petroleum, and because as Scott said of the ease and benefits that you could get in the transportation sector from that.  And so electric cars faced two fundamental challenges:  one is that the battery range is limited, better than it used to be but still limited.  Not as good as it one day will be, but even in that scenario, it’s not unlimited.  And the other is the cost of that battery and the fact that we’re used to, essentially, paying for our energy in installments over time, and in fact, in the case of the electric car, what you’re really doing is paying for the big bulk of that energy right up front, which is very difficult on the consumer and certainly not something that car companies would rush to embrace that would increase the price of their car to the point where it was out of the reach of many their consumers. 

So these were the problems that Shai set about to solve after he determined that it really had to go in this direction, and the way he determined that really was through a lesson that’s offered in history, which is that electricity, when it’s given a playing field, a level playing field, has always prevailed over other energy sources.  If you think back to kerosene lighting in the 19th century, which was rapidly made obsolete by the invention of the electric light bulb, which was cheaper and cleaner and much more, and safer, much more pleasant for consumers and quickly became the standard.  Oil for a time was obsolete, flowing in the rivers in Pennsylvania because it wasn’t worth putting it in the barrels.  And it’s electricity making oil obsolete that I think is the historical lesson we’re going to see repeated in this century. 

And so he thought about how did you solve these problems, first of all, the range problem.  So today’s batteries, a lithium ion battery that could fit into a car safely and power that car, according to the performance needs that are at least as good as what we’re accustomed to, that has the range of 100 or 120 miles.  And – so the first thing that Shai came up with was, what would happen if you put a plug in every parking spot?  In other words, the electricity grid is pretty expansive and pretty robust.  And there are very few parking spots that aren’t within a handful of yards of the grid.  So what if you just extended the grid those last few yards, and wherever you parked, whether you be at home, at work, at retail, downtown, you plug your car in wherever you park.  Every time you come back to your car, you have the full range of the battery. So it turns out that actually solves 95 percent of trips because 95 percent of the time we get in our car we don’t go more than a hundred miles. 

When he started to think about how you would solve the other 5 percent of the trips, he came upon the magic that makes our model work.  He said you can’t stop every 100 miles and wait six hours for your battery to charge if you want to drive from here to New York, and you can’t do a fast charge because that breaks one of his rules – it doesn’t scale; if everybody fast charged, the whole grid would come down.  So he said the only thing you could do would be to swap the battery.  And he spoke to some car companies about that, and they said that can’t be done.  And then he spoke to some Formula One engineers, and they said, yeah, that’s easy. 

And so he came up with this model by which if you’re going on a long trip, you’ll stop at a battery exchange station and mechanically have your battery exchanged.  But now he had to deal with the issue of, well, what about that battery that’s going in my car?  If I’m just freely exchanging batteries, I’m going to wonder how old is that battery, how reliable is that battery?  And then he realized what the real magic was. 

You have to not only separate the car and the battery; you have to separate the ownership.   Let all of the batteries – the battery is not part of the car; it’s part of the infrastructure.  And you have to let all of the batteries be owned by the operator.  Because what we really are is a mobile operator in the same way that you’re used to AT&T or Verizon or Sprint.  Those companies buy bandwidth from the government, sell minutes to you on your phone, and in between they put the infrastructure on the phones, the infrastructure and the devices that translate from the bandwidth to the minutes. 

So what we do is we buy electricity, and it so happens that we have a policy to buy only zero-carbon electricity, which we can talk about why that’s possible or why we do that.  We buy the electricity, and we sell miles to the consumer that you can subscribe to according to your driving habits and what value is best for you.  And in between we put the infrastructure – the charge spots, the exchange stations, and the batteries – and the devices, which are the cars.  So that is essentially the model, and we own that whole infrastructure, including the miles.  We sell mobility services according to how much you drive.  Shai took this vision to people who he knew in governments, and through his work at SAP he knew several people in several governments around the world, and he put a white paper together and said here is a solution for getting off of oil.  And one of them called him back.  It was Shimon Peres of Israel.  Peres said to him, you know, I read through this, I thought through this; this really works.  And Shai says, great! Go do it. 

And Peres says, no way.  This is not a government project.  This is a new industry; this is a private company starting a new industry in mobility services for cars.  And Shai thought about it and said, you know, you’re right.  I have a whole group of very, very smart entrepreneurs, and I’ll put you in touch, and you’ll find somebody to go start a company that can do this in Israel.  And Peres says, well, what about you?  And he says, well, I have my dream job.  I’m going to be the CEO of SAP.  That’s what I’ve always wanted to do.  I’m 38 years old, and Peres says – paused for a moment and says, I guess that next version of enterprise software must be very special if it’s more important than ending oil.  (Laughter.) 

Two weeks later, the lead story in the Wall Street Journal was that Shai Agassi, the next CEO, mysteriously leaves SAP.  Nobody had heard of any rumblings of problems there.  It was a shock to the business world, to the technology world, and nobody heard of him for the next six months.  Six months later, almost exactly a year ago, we launched Project Better Place, which we now just call Better Place with $200 million in A round financing, making us one of the largest start-up companies in history.  At that point, we had the plan and the money, but there were really two more ingredients we needed to make it real.   One is we needed a car maker because again, our goal – we always keep our eye on the ultimate goal, which is to end oil, to really impact our demand for oil.  And while we love the guys at Tesla, and all of the other electric car companies, start-up electric car companies that have popped up in the last few years, we think they’ll be successful; we’re rooting for them to be successful. 

The truth is that, at least in the world as it used to exist a few months ago, 70 million new cars are sold every year in the world, and it may be somewhat less than that this year, but it will still be in the tens of millions.  And every year, that number of new internal combustion cars are rolling off assembly lines and into garages of people in the industrialized world.  And the truth is, if you’re going to do a start-up car company, at your most ambitious, you’re hoping that you’ll get into the six figures sometime in the next decade.  But that’s not going to have a dramatic impact on oil demand.  So what we said is, the wrong cars are being built, and what we have to do is convince the people who build them, who have the capacity to build them, to build the right cars. 

And we brought this, really, to every car maker in the world, and some are more open to the idea than others.  But one jumped on it right away, but that was Carlos Ghosn, and he’s the chairman and CEO of two car companies on two continents, Renault in France and Nissan in Japan, and he understood this.  And he had never been a fan of hybrids because he felt that hybrids are neither here nor there, but he also understood that there wasn’t the ability to do all electric cars absent the kind of infrastructure and operating model that I described.   And once he understood this model, he said, we’re going to build your cars. 

And then we needed only one more thing, which was a country to let us do this.  January 21st of this year was really our key date.  On that date, the Prime Minister of Israel stood up with Carlos Ghosn and with Shai, and said very publicly, Israel will be off of oil within a decade and actually put in place a policy of differentiated taxation.  As in Europe, Israel tends to tax cars pretty heavily and tax gas pretty heavily, and so they have a 70 percent tax on cars.  They said for zero-emission cars, it’s a 10 percent tax, and when you start succeeding to the point where it impacts the government’s revenue and they have to raise the 10 percent, they’ll raise the 70 at the same time.  So that the advantage to the consumer of an electric car continues to prevail until all of the tailpipes are replaced. 

And after we had that event, we got calls from dozens of governments – countries and states and cities – and many of them are continuing conversations.  But two months later, we signed our second country, which was Denmark.  And the reason that Denmark signed so quickly was that they had something else in it for them.  As I said, we buy only zero-carbon electricity.  We buy only electricity from sources that don’t produce carbon, and Denmark gets 30 percent of its electricity from wind.  They have an incredible wind-generating infrastructure.  And today, a lot of that wind blows at night when there is no demand for electricity and no ability to store the electrons created.  So they give a lot of that electricity away to Germany.  What they saw, was not only the ability to get all of their tailpipes off the road, but to create a reservoir of distributed electricity storage that allowed them to tap into the wind that was blowing at off-peak hours.  And that’s what their plan is; their state-owned utility became our partner, and together we’re creating Better Place Denmark. 

A few weeks ago, we announced our third country and broke out of the notion that this had to be on a small scale because as I said, one of the criteria was that it had to be able to scale to large countries too.  So Australia became country number three.  And they announced a few weeks ago that the big private investment bank in Asia is going to raise a billion dollars, and they are very confident of doing it even in this environment, to build the infrastructure across Australia, which will begin to have mass-produced electric cars in 2012, just a year after Israel and Denmark. 

We have continuing conversations going on with a number of other countries and even with some states and regions within the U.S., and we hope and expect that you’ll hear more announcements before too long.  So when you think about the crisis that we find ourselves in at this moment, if I said that six months ago, everyone would know that that crisis was that oil was $140 a barrel.  Now it’s $60 a barrel, but the reason it got there is the wrong reason.  It’s not because we found something better to replace, but it’s because everyone’s expectations of our economic growth have been so diminished by events including that price. 

But we think that what you really have to do is take a very holistic look at the policy environment and not sort of pigeonhole this as the energy project, because, really, what we see this – at its best – a project that does the job stimulus that’s being talked about, because if you’re going to build the infrastructure across the U.S., it’s very easy to understand the cost of that.  It costs $200 for each plug, and it costs $500,000 for each battery exchange station.  You need two plugs per car, and you need one battery exchange for every 5,000 cars.  So, if you do the math on that, it’s about $500 per car to do the infrastructure.  By the way, what the infrastructure is providing is range extension. 

And if you take a look, for example, at the car that GM is hoping to produce, the Chevy Volt, they do range extension also except they do it inside the car by means of an oil burning generator that charges the battery, and that’s at a cost of about $5,000 plus $10,000 for the battery, making your really $25,000 Chevrolet cost $40,000.  Our cost, about $500 per car, across the U.S., would be a $100 billion project, which used to seem like a lot of money until the government started giving it out every week.  (Laughter.) 

But, when you think about $100 billion in this context, it’s a couple of months, maybe now three, worth of crude oil.  But it’s also 80 percent installation, which is of course local infrastructure jobs, which is what we seem to need now.  And the other crisis that we seem to be facing at this moment is that we are losing our car companies. The reason we’re losing them is they’re producing Car 1.0 in an environment in which we’re about to move to Car 2.0.  And so far only Renault and Nissan have figured that out, but if the restructuring of the U.S. automobile industry, and we can again be the leaders in the automotive industry, which was of course, the engine of growth for our economy in the 20th century, and made it an American century and can do the same thing again.

We can look at it very differently because we all know that as these auto companies are on their hands and knees, the most profitable industry in the world is the oil industry.  Exxon-Mobil made $170 billion last year.  And with our model, what we can do is say, we have an operating cost of about 8 cents a mile.  That’s the battery depreciation plus the clean electron.  I’m actually driving a plug-in Prius, and I’m still paying more than that.  If you’re driving an average car in America, you’re probably paying two to three times that, and an average car in Europe or Israel, you’re paying five or six times that.  So there’s a lot of margin in there.

Now, how we divide up that margin creates a lot of magic for a lot of different possibilities.  For example, if you’re in the 30 percent of cars that drive 70 percent of the miles, and that’s the commuting class, and this is true in just about, over all industrialized countries. That 30 percent that does the 70 percent of the miles and burns 70 percent of the oil, they’re by and large lower income.  They’re by and large people that don’t live near where they work and are commuting long distances, and they’re not doing it in new cars.  In fact, they’re certainly not looking at premium cars let alone buying new cars, they’re looking at buying used cars, the best car available for the price. 

And so what you need for that group is not the premium clean car but the discount clean car.  So one of the things you can do with that margin is give a day-one rebate that makes that car less expensive, and in fact, for the commuting class in the jurisdictions of the world where they price oil in all of its exigencies, by tax, and where they were paying, this summer, upwards of $700 a month in gas, in those areas, you can actually get that refund on day one to amount to the cost of the car, which makes the car essentially free.  Which means that their choice is longer between an unaffordable new car and their used car that they’re driving now but between the operating costs on their used car and getting to a brand new electric car.  So that’s one of the magic things about that margin. 

But another thing is this.  We can give a penny on that margin back to the company that manufactured that car.  Now, you have for the first time, a recurring revenue for the automobile industry which not only would return it to its previous profitability because now they’re manufacturing cars that people want to buy and they’re actually less expensive to produce, so their margins should bigger, but now, if you think of them as the razor company, we’re giving them a cut on the blades.  It’s kind of like the deal Apple insisted on doing with AT&T, where for the first time a device manufacturer got a piece of recurring revenue stream from the minutes.  So we can do that, and we can say that to the government. 

When you go ahead and bail out the U.S. automakers, which is what you’re going to have to do, here’s a narrative that shows the taxpayer that this is not throwing good money off your back because we’re now going to restructure this industry in a way that it’s going to have the revenue to be profitable and to pay back their debt to the government and continue to employ at a very high level, probably a higher level, with all the ancillary impacts of all the industries that will be created through this.   So the consumer gets a discount car, or a free car, pays for the miles that they drive.  The government could actually tax the miles to get the revenue, first of all, in a more progressive way, and do it in direct proportion to the amount that people are driving, and the manufacturers get a whole new business model, revenue model.  And we get a country that doesn’t have to send, depending on what the average price ends up being by the end of this year, somewhere between three and $700 billion dollars out of our economy for the year, mostly to countries that don’t necessarily share our values. 

And maybe those countries that have relied on the ability to just extract molecules from the ground and therefore haven’t built real economies and therefore are somewhat dysfunctional, not only in the Arab world, but we see what happens in Russia and Venezuela when oil spikes.  Maybe those countries develop economies that are based on more sustainable models and become more functional.  And of course, we reduce carbon emissions by an enormous amount, even more than taking the tailpipes away because we also enable the greater production of renewable electricity by providing the storage needed for the intermittency that characterizes most renewables. 

So it really is, as I said, a holistic story.  And we certainly don’t expect to do all of this by ourselves.  We need the – first of all, we expect that we are the first of many players in a very competitive industry of being a mobile operator for cars.  We suspect that ultimately oil companies will come to see themselves as oil companies and mobility companies and also get into similar businesses.  Obviously, we’ll need – while our business model is profitable and that’s why we go ahead and make these announcements, and you’ll see, as I said, more announcements soon, if you wanted to – the pace at which we can do this is very, very policy dependent because as you know capital is not that easy to come by these days.  And if we have to go raise our own capital in each location to start projects then we’ll deploy it, but we’ll deploy it at a very measured pace. 

Whereas if, for example, a new administration decided that this was going to be a priority because of all the elements that it could achieve for the country and decided that it was going to share in the cost of constructing the nation-wide infrastructure or offer low-interest loans and enact other policies that were able to accelerate the model, I really do think that you could get the infrastructure to get the entire country covered in a single presidential term.  And then, if you did the right thing with the car companies, by the end of that term, the right cars would be rolling off assembly lines so that Americans could drive all-new electric cars, having an environment in which range is not an issue because they plug or they swap with all the benefits to our economy, our environment, our security.  So that is our somewhat unambitious agenda, and you know, I hope that you guys find it compelling and that you’ll give it thought and think about ways in which we could work with stakeholders of all sorts to bring this vision to reality in the United States.  Thank you. 

(Applause.)

MR. PUGH:  Thank you, Michael.  We’re going have a – take time now for Michael to answer some questions and I forgot to make one announcement earlier:  There are fliers outside that talk about a U.S. Army energy forum day, which will be this coming Monday in Lansdowne, Maryland.  So if you’re interested in finding out about that, pick up the flier and you can register online.  So this session is being webcast live, so if you have a question, you can just move up to one of the microphones.  Make sure you speak loudly.  If you’re affiliated with a company, an agency, or an organization, please tell us your name and who you are affiliated with.

    Q:  Michael, a couple of questions on your thing – my name is Jim Jordan (sp) and I’m with Maglev, the all-electric high-speed transport.  Are you going to – your company is going to build your own batteries, question one?  Are you going to shoot for an international standard, question two? 

    MR. GRANOFF:  Is that it?  Okay.  No, we’re not going to build our own batteries.  There are a handful of battery makers around the world that are making the types of batteries that we consider viable for this, which is various variations on lithium-ion with iron and phosphate that takes away the issues of thermal runaway that causes the safety problems, but also extends the life to enough cycles that you can make the economics work.  So we’ll be buying batteries – we’ll be a very big procurer of batteries. 

We actually think that another policy objective for the United States should be to have a domestic battery manufacturing capacity, because we think that, if you fast-forward a couple of decades, we will go from having a oil dependence to a lithium battery dependence and we have the capacity now for that to be indigenous here – for us to be an exporter of that – and that’s what we think we should do, because if we let China do it, as is the path that we’re on now, they have so many of their own needs that what they will leave for us will be not enough and very expensive.

Q:  Have you done your macro-analysis of the amount of lithium available?

MR. GRANOFF:  Yeah, you know lithium is – turns out to be one of the most plentiful elements in the universe, so it’s – I’ve asked that question myself many times, and I don’t understand the scientific rationale behind it, but I understand that it’s very plentiful.

Q:  Thank you.

MR. PUGH:  Over on this side.

Q:  Sir, thank you very much for your presentation and the notion of taking some leadership in the world on this problem. 

MR. PUGH:  Could you tell us your name and affiliation, please?

Q:  Lieutenant Colonel Brian Wideman (sp) from the United States Air Force.  I work in the facilities area – public works.  In the notion of partnership, have you had discussions in any of these countries – you mentioned in Denmark, you’re doing it – in Israel, for example.  You know a big problem that we’re going to have in the U.S. is the strain that it places on the electrical grid and other related issues with electricity generation.

MR. GRANOFF:  So have we had discussions, you mean, with the utilities in these places – is that the question?

Q:  Correct, yeah, the additional capacity and the distribution requirements for – and, you know, what order of magnitude might be a good place to start?  You know, is this an additional – because we’re experiencing considerable growth now – is this an additional 20, 40 percent over some time period?

MR. GRANOFF:  It’s an additional 6 percent once you get to full penetration, but you obviously don’t get to full penetration overnight, and over the course of a decade, we should add a lot more than 6 percent to the grid; we should add it in renewables and we should also, as is going to happen whether we’re around or not – upgrade the grid and make it more versatile.  So we think all these things happen in parallel, and that that limitation shouldn’t be a problem.

MR. PUGH:  Over here.

Q:  Hi, Tom Collina, 20/20 Vision.  Hi, Mike, how are you?  Two questions:  One, when do you expect to start major operations in the United States, and what kind of federal policies do you need to help you do that?  And two, where will the zero carbon power come from and how will you facilitate that?  Thanks.

MR. GRANOFF:  Okay.  In terms of when we’ll start operations, well, we are a Silicon Valley-based company, so in that sense, we already have operations in the U.S.  In terms of when we’re going to actually deploy infrastructure in the U.S., I can just say to continue to watch the news.  In terms of the – and renewables was the other question?

Q. COLLINA:  Well, the federal policies –

MR. GRANOFF:  Federal policies.  Well, you know, obviously, it’s a very broad agenda that I’ve outlined and there’s not a single policy bullet that makes this happen.  But, you know, the government has already enacted a lot of incentives on electrification.  Everyone has this consensus that’s emerged around the electrification of transportation; the CEOs of all of the Big Three have articulated that and they have their own strategies to get there, but obviously they’re not getting there nearly as fast as we think is necessary, both for their own survival and for our national security and environmental and economic security needs. 

So the government has stepped up, and in the latest – in the $700 billion bill, there was also a tax credit, as you’re aware.  It could really be described as the Volt Bill to provide a $7500 tax credit on batteries up to the size of that in the Volt – 16 kilowatt-hour batteries.  We think that there should be a big distinction for the zero-emission car – for the car that doesn’t have a tailpipe and doesn’t provide any emissions – there should be a bigger credit on that, and that’s one possible policy. 

But we also think that it’s broader than just about the cars.  And there are a million ways in which you can go about answering the question, how does this infrastructure get in place.  And, as I said, without the government, what we do is we find the capital – private industry, private sources – and begin to gradually build that infrastructure out.  And that’s what we’re doing in Israel, Denmark and Australia.  And we could do it in the U.S.  It would just take a while.  The acceleration of that deployment would come from some level of federal government – or even local government, and we’re starting to see some of that – but some type of government assistance on that deployment.

On the renewable question, what type of renewable depends on where.  First of all, as I’m sure people here are aware, France is already about 80 percent nuclear.  If we were to deploy in France, nuclear is a zero – we don’t encourage or discourage nuclear power – but if it’s there, and it’s zero-emissions, that counts for our purposes.  Israel is also an interesting case, because Israel has spawned some of the most advanced solar energies in the world and most of the utility scale – solar – that’s deployed in the world originated out of Israeli technology, and yet, there’s no indigenous solar in Israel.  And the reasons have been policy and the fact that you haven’t had the incentive to build nuclear there in Israel, even though they have plenty of sun to make that very, very profitable. 

So what we do is we come in and say, we know we’re putting a car on the road, we know it’s going to be there about 10 years, we know it’s going to use about this much electricity, and we can sign a power purchase agreement to say that we’re going to be the purchaser of that electricity.  And, with that, the utility can go to the solar providers and tell them that they’re – they should build the right solar capacity.  In Denmark, as I said, we have wind.  And, you know, in the U.S. it would probably vary by region in terms of whether it would be wind or solar or nuclear or some other form of zero-emissions energy.

Q:  My name is Pat McArdle and I’m with Solar Cookers International.  I think your program and your project is just incredible, and I know Al Gore has – with the We Campaign – has also come out with specific proposals to get us off fossil fuels in the next 10 years, and I’m wondering if you’ve spoken to him and what his reaction would be?  And I will also hope very much that you’re somehow involved with the Big Three, who are hat in hand up on the Hill right now, because this sounds like really a great project.  But I’d be interested, if you have spoken with Gore, what his response has been.

MR. GRANOFF:  Al Gore knows about us, is a fan of ours, hasn’t engaged on any substantive level.  But, you know, he has proposed something very, very ambitious on the electricity side – to get to 100 percent renewables in 10 years.  Whether it’s feasible or not, I think, is less important than the fact that that vision is there.  And if we’re going to do that, but do it without a conduit to the vehicle, we’re not going to do anything about our oil dependence.  It’s funny to have watched all the political conversations over the last six to 12 months, when these issues are discussed, you would think that you could replace oil just by either building nuclear power plants or by putting in renewables, but if you don’t have a way to get those electrons into cars, it doesn’t really change the equation at all.  So I think it fits very, very well with his vision.  And in terms of the Big Three, we’ve talked to every major carmaker in the world and, you know, we expect – our arrangement with Renault-Nissan has an element of exclusivity but not to the degree that it would shut out any other automaker that wanted to sign on to build what we think is Car 2.0, which is the all-electric with the battery exchange.

And, you know, obviously, the Big Three have been pursuing their own visions in this area and have felt very strongly about those visions, and whether or not those visions have merit is another conversation, but I think that’s going to be a conversation that’s going to happen more in this town than in Detroit, because of the situation that they’re in.  So the degree to which we can help policymakers understand what we think has to happen and the degree to which they can use the leverage that they now have, because obviously the auto companies are only going to survive with the help of government at this point, that’s one of the things that we’re trying to do.

MITZI WERTHEIM:  Mike, I’m Mitzi Wertheim with Energy Conversation.  I’m always interested in the logistics of this:  Can you explain your vision of the logistics – when I drive into a service station, how long do you think I’m going to have to wait to get my battery changed so I can move on?  And let me just go back, because I’m not sure I got your answer about standards, it seems to me –

MR. GRANOFF:  Oh, standards, I didn’t answer that – you’re right.  I’ll do the standards one, first, so I don’t forget again.  Yes, we’re 100 percent for standards.  One of our first high-level employees was someone who is an expert on international standards, and she’s working very hard with international standards agencies to create a standard.  We obviously don’t want to have – when you pull up to a gas station today, you don’t have any question about whether the nozzle is going to fit into your gas tank; you know that it is – wherever you go in the world, that’s going to work. 

And it should be the same with the plugs; the plugs that are – that go into the car should be interchangeable and compatible.  Now, when we end up having multiple players, you’ll have a situation that you can either analogize to ATM machines, or maybe pay an extra fee to use somebody else’s charge spot, if that’s where it’s located – you’re not going to have more than one plug in a spot.  You know, or you could use it – the cell phone analogy, again – you could roam on another provider’s network for an additional fee.  But we are a big, big believer in standards.

First part of your question is – remind me?  The experience of battery exchange, right, okay.  So the first thing to remember – and the battery exchange definitely comes out as the most novel part of our plan, and everybody always is very curious about it, and it’s been the area in which we’ve probably generated the most controversy.  But the truth of the matter is, if you think about your own driving habits – think about how many times a year you drive for more than 100 miles at a time.  That’s the number of times that you’d go to a battery exchange station.  In my case, it’s just a handful.  And so, in my ordinary life, I would never even see a battery exchange station, because every time I come back to my car, it has a 100-mile range, and as long as I’m not going further than that in that particular trip – and there’s a plug on the other end, which is part of the vision; there’s a plug wherever you park – then I don’t need one. 

But when you do need one, what will happen is, first of all, there’ll be a whole nother element to this that I didn’t talk about, which is the user experience.  And the integration of global positioning services with other services, including energy management services – that is all very interactive between our control center and your car.  So if you indicate to your car that you’re going to be driving to Princeton, New Jersey, your car will say, well, you’re not going to be able to get there on one battery.  You’re going to have to do a battery exchange.  You can do – it’ll give you two or three possible locations where it will make sense to swap the battery.  It will make sure that, at those stations, your battery is not only in stock, but is charged and ready, schedule a time based on your estimated arrival time, modify it when necessary, and you eventually get to your battery exchange station. 

And imagine it like going through a car wash, except instead of your car getting cleaned, there’s one mechanical arm that comes down and takes the battery out of the undercarriage of the car, the car moves along, and then there’s another arm comes up and replaces it with a full battery.  You know, we’re trying to get the whole process down to two or three minutes.  So it will be less time than you’re used to filling for gas, and, again, you’ll only do it however many times you go beyond the 100-mile range in a single trip.

Q:  Hi, Miro Kovacevic (ph), Virulas Consulting (ph), Santa Fe, New Mexico, and Los Alamos, New Mexico.  Do you consider your technology – (inaudible) – in other words, do you really think that lithium-ion or methanol air or whatever – cobalt ion – is here to stay, or this is just a step up to double-layer supercapacitor or – (inaudible) – nanotubes and the rest of it?

MR. GRANOFF:  I don’t have any idea what future technologies will bring, but I think that a network like we describe is going to probably be a prerequisite, whatever range you end up getting to on batteries or supercapacitors or anything else.  I don’t know that much about supercapacitors – I know that there’s been a lot of sort of intrigue surrounding their abilities.  I haven’t seen them proven in the way that we’ve seen lithium-ion batteries proven, and like I said, technology risk was one thing we weren’t willing to talk about here.  You know, if the supercapacitor battery came along with a 500-mile range, I think it would be phenomenal.  I think you would still want to have the infrastructure that we described and the business model, but you know, that’s something that we would welcome.

Q:  May I, to just follow-up question:  Why you are source-neutral – I mean, sink-neutral and source – (inaudible) – in other words, I mean, if it’s nuclear, it’s good – I mean, it’s still pollution is there.  I mean, it’s pollution of the earth, not of the air, so – do you see what I’m saying, I think it’s a superficially moral position, basically.

MR. GRANOFF:  Well, look, I mean, I think if you asked most people in the company, their preference is for truly 100 percent renewable electricity.  We think that on the electricity generation side, the biggest issue that we have today is carbon, and given the fact that we don’t have nearly the renewables that we’re going to need, I think we’re willing to accept any electricity that’s not carbon.  But I would say – my own personal opinion – if you’re starting from scratch today, you’re better off going with renewables, because by the time you could get a nuclear plant licensed and up and running, you will have run a cost-curve on the renewables that will make that the more cost-efficient alternative.  But we take a position on carbon within Better Place – that’s how we come out to the –

Q:  My name’s Kerinia Cusick, I work for Think Energy.  We are a renewable energy consulting firm, so we look at power purchase agreements all day long and understand the economics of this.  So I guess my question is around the economics, and I got a little lost in your talk there when you were talking about it.  So I’m coming from a simplest perspective, which is, you know, electricity cheap in some states – you know, West Virginia, 6 cents a kilowatt-hour, Connecticut, maybe 15, I don’t know what the numbers are.  You know, Hawaii, 25 cents, very expensive over there.  So does that mean it’s really cheap for this car in West Virginia and really expensive in Hawaii, or are you guys thinking of a standardized pricing?  Or how are you guys thinking that through?

MR. GRANOFF:  When you get down to the level of the cost of the mile of the electricity, the differences end up being somewhat negligible.  You know, it might be – we’re going to – I mean, our pricing is not going to be based on the cost, it’s going to be based on the competition.  The competition today is oil.  So we’re going to be competing against two or three or four-dollar-a-gallon gasoline, and that’s going to be how we price.  Our costs, your right, will vary a bit here to there, but on the mile basis, it may be that it’s seven cents here and nine cents there – our price is still going to be higher than that as long as we’re competing against oil, which is unlikely in the most efficient car to drop below about twice that. 

Q:  So if you’re in kind of a relationship, like, you know, so oil, $3 a gallon, what does that mean in the sense of kilowatt-hour that it would need to be to be parity?

MR. GRANOFF:  I think the answer is that oil is competitive with our pricing, around a dollar a gallon.

Q:  Okay, thanks.

Q:  Hi, and thank you very much.  I’m Lisa Wright (sp) with Congressman Roscoe Bartlett, who’s a Republican, which means that he’s not a chef in the kitchen in this next week when we have the stimulus – the second stimulus coming with probably $25 billion on the table for the auto companies.  Do you have anyone working on language with the chefs in the kitchen on that, and please do so.  And if I could take you back, you talked about government assistance for the infrastructure acceleration deployment; if you could elaborate a little on what type of government assistance you might need?  And that’s plenty.

MR. GRANOFF:  Okay.  The answer is, I’ve spent a lot of time in Washington these last few months, and I’ve talked to a lot of the people who are going to be involved in whatever package is put together for the auto companies.  I can’t tell you that I’m very optimistic that they’re going to make $25 billion in aid conditional upon building battery exchange electric cars next week, but I do think that the story is starting to resonate and I am pretty sure that the $25 billion won’t be the last trip of these executives to Washington, even in the next six to 12 months.  So I think as this conversation matures and as people start to understand that, if they burn through about $15 billion in the last three months, that giving them $25 billion now is not necessarily going to be the most sustainable arrangement if nothing else changes.  You know, I think – I’m optimistic we’ll make progress over time.  The second question was –

Q:  It was about government assistance and if I could segue, the congressional office buildings have parking lots for their several thousand employees, and I’m sure there are other similarly large parking garages and – you know, I drive 30 miles to work – I’m one of those folks – but there’s no plug, currently, in the garage for –

MR. GRANOFF:  Right, you know what, there are lots and lots of different ways that the government could help accelerate the deployment of infrastructure, some of which I mentioned, some of which, probably, we haven’t thought of and other people haven’t thought of and that will come along over time.  You know, I think the important thing is to be getting into that conversation about how best to do it and I don’t want to, you know, take random stabs in the dark and prejudice other outcomes that are possible. 

But what you describe is exactly right – when you get to the deployment phase, every one of those parking spots should have a plug – should have the ability for someone who’s driving an all-electric car to come to work and to know that by the end of the day, their car will be fully charged.  By the way, if we’re right and the automobile industry is right and all of the other prognosticators who’ve said that electric driving’s inevitable – if we’re right – companies like ours will be needed for another reason, which is, if you picture those parking lots and if you picture all the cars coming in at eight and nine in the morning and plugging – and then everybody going up the elevators and turning on the lights and the computers, that’s not the moment that you want those cars to be charging. 

And the utility is getting into more smart-grid technology and more ability to discern different appliances on the grid, but if you think of all of the millions of cars, that’s going to be a whole nother business model for them.  It’s really a software company model, to determine which of those cars really needs to be charging at that moment – probably not too many – only the few who have to go to meetings an hour later far away – and the rest of them can charge whenever the grid is at its lowest level of demand during that day.  Or, if someone is only driving ten miles to work and just driving ten miles home, maybe they don’t charge at work and they just charge overnight. 

And all of these are preferences that you can adjust online or on your phone or maybe, on a button on your keychain that says charge now, for a day when you’re out of your ordinary pattern.  But you know that when you don’t hit that button more than three times in a month, you’re going to get a discount.  So put all these price signals in, you get the right incentives, and you have the operator with the software in the control center in the middle – all these batteries out there become an asset to the grid – become energy storage rather than being a detriment, which is what they would be if they were all just sort of ad hoc out there, plugging in and charging.

Q:  Adam Siegel, Energy Consensus.  That last answer, by the way, was useful because you kept saying you will always be 100 percent charged, which eliminated the battery as a storage capacity – this was a more robust answer, thank you.

MR. GRANOFF:  Right, you’re right.

Q:  A different one, I’m trying to think.  I’ve been in awe of how fast this is moving, from watching – (inaudible) – and figuring out what was going on and then the announcement on – it’s been impressive to watch the new announcement.  But think about – trying to think about, okay, 2011, Denmark and Israel, 2012, Australia – new cars.  We keep hearing about, boy, it’s at least five years as fast to get a new car.  Developing and having the battery exchange equipment and deploying it – the plugs and plug processes – and oh, by the way, getting the international community to agree to standards, which is frequently a 10 year process.  How does this occur in three years?  And, oh by the way, the standards before any of this stuff is built.

MR. GRANOFF:  Well, that’s a good question.  We have a very aggressive timeline, and it’s because of the urgency we see with the issue.  And – as you described, our goal is – we’re already beginning to put infrastructure in place in Israel and Denmark – you know, the standards process – we’re working very hard to try to figure out what the right standard’s going to be and to try to build along those lines, but we can also modify things over time.  And if it turns out that what we’ve built for Israel is not what the ultimate standard ends up being, that’s a problem for one country and it’s not a problem for the rest of the world and that’s a problem that will get fixed over time in that country.  But the truth is, since there are very few cars that drive out of Israel, it wouldn’t really have that much of an impact internationally.  In fact, you know, if your car leaves Israel, generally it’s been stolen – (laughter) – because there’s not really any other legal way that you can take your car out of Israel. 

But, you know, the Renault-Nissan are not – for this first round – building cars from the ground up for all-electric; they’re taking existing models and modifying them, and that’s why they’re able to do the mass deployment – the mass production – as quickly as they are.  You know we have very cooperative governments in the first countries that we’re dealing with that are helping us and we have, really, already an incredible team – a lot of great software minds, but also a lot of terrific industrial engineers putting all this together, so it’s ambitious and aggressive, but we think that’s what’s called for so that’s our plan.

Q:  All right, Luther Alexander.  Just a simple question:  As these new cars come on, what happens to the 1.0 version cars?  Any thoughts about what will become of those or when?

MR. GRANOFF:  Well, it would be nice to think that we’ll succeed faster than the usual retirement time for these cars anyway.  But you know it is true – I often wonder what’s going to happen to – all those F-150s sitting in manufacturing parking lots around the country today don’t have anybody to buy them.  You know, I think the answer is that we have to start making the right cars as quickly as possible and retiring the 1.0s as quickly as possible and I imagine that there are industries around the recycling of those cars that I hope will be doing a brisk business in the decade ahead.

Q:  Good evening, David Comas (sp) from Suntech.  Did I understand you correctly to say that your pricing model is going – for electricity – is going to be based on the price of oil, and therefore – so if not, you own the infrastructure and you will price the electricity based on cost?

MR. GRANOFF:  We’re not pricing the electricity.  We’re pricing the service of – the mobility service.  Today, you pay for gas for your mobility service, so that’s what we’re competing against when we provide a different type of mobility service.

Q:  Essentially, you’re still talking about the price of your mobility service – the price of what goes into it, which is electricity and the battery –

MR. GRANOFF:  Those are our costs, yeah.

Q:  – as against gasoline, which is – essentially, you’re saying, we’re paying our electricity price based on the price of oil.

MR. GRANOFF:  Now, no, those are our costs.  So what we pay the utility is one thing; we’re making a bet that that’s going to be less than what oil is costing to perform that same function.

Q:  Where’s the competition?

MR. GRANOFF:  Well, like I said, I think we’re the first of many companies that will be in this industry.  If you look at the cell phone industry – so there are about four major national players – I don’t know if this is going to be an industry that has four or three or 12, but I think, you know and that’s just domestically – obviously, there are many more cell providers internationally – I think it’s going to follow that pattern very, very similarly.  You’re going to see other companies emerge and – you know, we will compete against gas as long as that’s the standard, but once that – once you hit a critical mass, then we’ll be competing against each other and, presumably, the price will be even cheaper.

Q:  So you’re saying that Exxon or Shell or whatever will get into the same mobility process?

MR. GRANOFF:  It’s my prediction.  I think so, because I think that’s going to be the future of mobility and I think they’ll recognize that at a certain point, and they’ll get into it.  And they have the capital to do that in a big way.

Q:  Thank you.

Q:  Bill Burke from the Navy.  It seems to me that one of the challenges you have in the United States, and I know you’re playing your cards close to the vest on this one, so I’m not trying to get you to say anything you don’t want to – but it seems like one of the things that might be viable is getting a state to do this, because, for instance, California is bigger than any of the countries you’ve talked about and since they tend to lead the way in these sorts of things, it would seem like that might be the way to go.  Is that a – are there any particular problems with doing that – that sort of approach? 

MR. GRANOFF:  Well, no, you’re absolutely right – that’s a very good approach.  I, again, encourage you to watch the news.  The issue you have is – like, for example – and this has been written about – you know Gavin is the mayor of San Francisco and he’s a friend of Shai’s and very early on said, let’s do San Francisco first.  And our response is, you can’t do San Francisco, because that only serves the handful of people who maybe drive internally within San Francisco. 

This is a program that you can’t really do a small pilot project in a small town.  This is a regional – the boundaries of this are, basically, where people drive.  Like I said, in Israel, nobody goes outside and so that was a good place for us to start.  In Denmark, most people don’t leave that country so that was another good place.  You know, Australia, similarly.  But what you find is that you actually have these transportation islands in places that you don’t think about.  So, for example, you took the example of California – if you look up and down the West Coast, what you really have is a series of transportation islands, from San Diego north to Vancouver. 

And if you draw a 100-mile radius around each of these metropolitan areas, most of those cars don’t leave that environment.  When they do, it’s generally along one or two freeways, and if you put battery exchange along those freeways, you cover the whole interconnectedness of the whole region.  So you could really – that’s why I say that we think with the right political will and capital behind it, you could get an infrastructure in the whole continental U.S. in a single presidential term. 

And if you think about when you first got a cell phone, it came with a little map with those orange splotches indicating where you had coverage until the coverage was universal enough that you just assumed that wherever you’d go, it would work.  And it would be similar with us in the early years.  One advantage the U.S. has over other countries is that we have two-and-a-half cars per household, which, presumably, means people could upgrade one of their cars to electric first, and then as they see that everywhere they need to drive has coverage, can move the other one. 

Q:  Okay, thank you.  One other question:  On the topic that was just talked about – the pricing model – if I had one of these cars and I charged it at home, then I think I’m outside your pricing model, is that right?

MR. GRANOFF:  No.  You’re subscribing to us for miles, so you shouldn’t have to pay anything additional than what you pay to us, which means when you charge at home, you don’t – let’s say that you’re one of the fortunate people who has an attached garage and can just plug it into the wall, well, what we’re going to do is give you a little transformer that you plug between your plug and the wall which will indicate to us that those are our expenses – those electrons – not for you to pay the utility directly.

Q:  So you’d be the new cable guy.

MR. GRANOFF:  Yeah, but it’s not even that – it’s more like the guy who comes – so when you have to put a new washing machine in, to put a heavier – heavy duty plug there.

Q:  Okay.  So, in that model, will that drive differential pricing as far as electricity rates, time of day, that sort of thing?

MR. GRANOFF:  I think that’s going to happen, you know, without this.  I think that path is already on its way.  And how that impacts us is really going to be a matter of Better Place’s relationship with the utilities more than just – we’re trying to make it as simple as possible for the driver, which is to have one address – that’s where you subscribe for your miles; that’s where you get your service from – and as a driver of an electric car, you don’t have to think about the utility at all.  That’s the goal.

Q:  (Off mike, inaudible.)

MR. GRANOFF:  Well, you know, we don’t think that we’ll be the only player in the world, as I said, and there might be other players that say, you know what, we’re not giving you an infrastructure outside of your home.  If you never go more than 100 miles in a day and you plug every night, and you don’t worry about the range, then you know, there’ll be carmakers that’ll just produce electric cars – you don’t have to finance that battery in a different way, although you have to pay up front for that battery. 

But then, I mean, today, I drive a plug-in hybrid and I plug it in at home and I now, occasionally, when I drive to New York City, ask if they can have it ready at 3:00 and if they can plug it in.  And I get some very funny looks, but occasionally, they actually do it, but more or less, I plug at night at home and, because I have, also, the gas engine in the car, I don’t worry about range.  But if you really are that Sunday driver that never leaves a certain radius of your house, and you’re willing to pay the up-front cost of the battery, maybe that’s the right plan for you, not to take the Better Place model.  That will happen out there, because electric cars are going to proliferate and there’ll be lots of models, but we think this is the one that’s going to be the mainstream.

Q:  Don Auerbach (sp), U.S. Department of Agriculture, retired.  Do you have any plans or projects underway in Canada?

MR. GRANOFF:  You know, North America is – we consider to be –

Q:  Well, the reason I suggest that is that it may not be exactly the kind of infrastructure you’re needing, but they have a lot of places up there that have the plug in place you park your car to run the engine here, just so that they can get it started.

MR. GRANOFF:  I’m married to a Canadian and I’ve become familiar with that and it’s a very good point.  Their people are already used to plugging their cars.

MS. WERTHEIM:  Mitzi Wertheim, Energy Conversation.  I don’t have a garage.  So I’m trying to understand the logistics of how you do this, you know –

MR. GRANOFF:  Where do you park your car?

MS. WERTHEIM:  I park it in the alley behind my house, in a space that I own and I rent four other spaces.  So I’m just trying to understand the logistics of this.  Do you have a meter with each one and you put your credit card in?  I mean, what’s this mechanism?

MR. GRANOFF:  No, no, you have a device that looks, maybe, like a parking meter.  We’ll actually be unveiling this device very soon publicly, so you’ll see it.  And that’s, really, what goes into most parking spots, unless they happen to be in a garage, where you can just connect this transformer.  But, you know, if you became Better Place’s subscriber or we had a contract with the municipality or the local government to do that area, we would come and, wherever there’s a spot for the car, put one of these things.  Now, you don’t put a credit card or something because one of the things that will happen when you plug is that our control center will recognize your car, recognize your battery, see your state of charge, determine whether you should charge, and also determine your account – how many miles do you – what plan you’re on and how many miles you are allocated in that plan and charge you accordingly. 

MS. WERTHEIM:  So the communication is between the car battery and –

MR. GRANOFF:  – and our control center.

MS. WERTHEIM:  – and the control center.  Okay, thanks.

Q:  Peter Garretson (ph), Energy Consensus.  I’m curious, as an interim measure, have you considered that, in a battery pack that you might be able to switch-in-switch-out, it might have a geometry or it might have a trailer that would allow for a, basically, a hybrid – that would allow you to have long-distance –

MR. GRANOFF:  You’re talking about a trailer with another battery on it?

Q:  Not necessarily another battery, it might be, you know, a small combustion engine that would allow you to have – that I wouldn’t want on my car most of the time, but if I were taking a very long distance in between coverage?

MR. GRANOFF:  Yeah, we – it’s not part of our model, now.  Our model is that, you know, we’re going to try to build the battery exchange in everywhere where you would drive long distance between places.  It’s technically feasible – we actually did look at this idea of a trailer with an extra battery for a time and decided that it wasn’t that cost-effective – and in terms of the engine you describe, well, that’s the Chevy Volt, and I described why I think that our approach is more mainstream.

Q:  Hi, Mona Khalil with the Advisory Board Company.  Do you have any plans to implement this system for public transportation – for buses that have very constant routes and that could charge with every five loops or so?

MR. GRANOFF:  Um, not our business model, but something that somebody should do.  And we encourage – one of the things that – you know, when I’m forced to think of any downside to our business model, it’s that if we succeed in this, we’re not going to reduce the number of cars on the road.  So in areas where congestion is an issue, one problem that we’re not going to solve in our first iteration – but one of the things that we’ve talked a lot about is working with municipalities in large, urban areas to find ways that maybe, ultimately, we can partner with public transportation so that if you’re a subscriber for our miles, you can also get credit on public transit when it makes sense to do that in places.  And, you know, it’s something we’ll look into in the future, but, technically, what you’re describing should be feasible, and in my –

Q:  Chattanooga’s been doing that for – (inaudible) – years now.  (Off mike, inaudible.)

MR. GRANOFF:  Terrific, so there’s one example.  And I was going to say in my previous life as an investor, which is how I got involved in Better Place in the first place, and then determined that there was never going to be a more interesting opportunity and decided I also wanted to work for the company in addition to being an investor, but another interest that I have is in a company in San Diego that is doing all sorts of alternative drive buses.

Q:  Adam Siegel again, sorry.  A question of – I guess it’s sort of two questions, one of which is:  When we’re talking about the transformer, when we think about the smarter grid or the smart grid, one of the thoughts of a battery – the plug-ins or otherwise – is that becomes the power storage if the grid goes down – that it’s a two-way – is the discussion for trying to do this as a two-way via your transformer? 

And the second one, which is getting toward a public policy-type discussion, what we’re describing – what you’re describing is you, as a company, are going to have as much knowledge about the movement of cars as a cell phone company has as long as you leave the cell phone – you’re going to know where the car is, how many miles it’s been driven, how fast it’s been driven, where it’s powered up – an awful lot of knowledge.  So forget big brother, it’s big brother business, right?

MR. GRANOFF:  Right, very fair point.  On the issue of what you were describing – vehicle to grid technology.  We’re a big believer in vehicle to grid technology – the idea that, when you have this reservoir of stored electrons in car batteries, that when you have a peak time in the day, those electrons can move in the other direction and take the place of a power plant.  And in Denmark, that’s one thing that they’re intending to do.  Our business model does not rely on vehicle to grid for revenue, so if that ends up being a source of revenue for us in the future, that will be a bonus. 

But as a public policy matter, we think it’s a great idea, because, again, it allows you to take the intermittency of renewable energy and, you know, use it as the grid demands and flatten that demand curve on the electricity grid, so we’re a big believer in vehicle to grid.  There are some great start-up companies working specifically on that that I’m sure we’ll work with in the future.  Yeah, on – I’m really bad at remembering the second questions, sorry –

Q:  The big brother thing.

MR. GRANOFF:  Right, the big brother – very good.  So it’s a very good question and you’re absolutely right that the nature of our model and our control center will have lots of data on this.  Now, our bet is that by the time we are in the market in a big way, the cell phone industry will be about 20 years old and all of the legal issues surrounding privacy that are going to – that come up around the issues of cell providers having this information – there’ll be protocols and there’ll be a legal precedent that we can follow.

And, you know, it will raise a lot of issues, but I think they’ll be issues that are, again, very analogous to what you see in the cell phone industry and we’ll obviously be very mindful of that fact.  We’ll certainly have the ability for you to shut down the communications in your car, so you can block us out – you’ll lose the ability to have that guide you in your energy needs and so forth, but if you want your privacy, you’ll be able to do that.  But in order to take advantage of those services, you have to have the communications, so we’ll have to find a way to work with it.  I’m sure it’s one of the problems that will come up and that we’ll find a way to solve, but I think it will be a less big problem than what we face in the status quo.

Q:  George Brown, consultant at NATO headquarters.  Is your business model different for Australia than it is for Australia and Denmark?  I see that the low-density, large areas that you might face in the outback – if it works – might be a good model for, let’s say, the prairies in Canada and the plains states in the U.S.  But surely, it’s going to be a big economic challenge.

MR. GRANOFF:  The business model is not different in Australia, but the deployment, obviously, is going to be different.  And in that sense, like I described, what you need to do is do the charge spots in the big population centers, where the parking spots are, the cars are, the people live and work, and all that – you put all those plugs in.  And then what you have to do is connect these regions, and the way you do that is to put a battery exchange about every 50 miles along these highways.  So that’s what we plan to do in Australia, and I think that’s a model that would be applicable to North America as well.

But also, like with cell phones, we’re going to go where the people are first.  And so, in the early years, we’ll be doing the major population centers.  And, if we’re right in all of our assumptions and this becomes the standard for personal mobility, then eventually us or our competitors or other players will finish the infrastructure for all the smaller regions of population around the world.

Q:  Julie Silber (sp), Computer Sciences Corp.  You mentioned that your model is to use only renewable – or non-carbon-producing electricity – which sounds like it would work in Denmark, where there’s a lot of wind power.  But if you take that to the U.S., where maybe there’s a lack of non-carbon-producing electricity – so if you’re the first company in this business and you do that and it works, well, what if a competitor comes in and says, we’ll use any electricity – we don’t care if it’s carbon-producing or not – and, presumably, carbon-producing electricity is cheaper than what you’re using, how does that then end up reducing carbon-producing electricity?

MR. GRANOFF:  It’s a very fair point.  And the way I respond to it is that there is a pricing difference, but it’s, again, it becomes somewhat negligible when you get down to the per mile cost, so it’s maybe another penny a mile for us.  We think that it’s worth – to the consumer – a penny a mile to have the sticker on the car that says that this car is truly zero emissions.  And even though if we were to use coal electricity for the cars, the fact is that it would be centrally produced and would have a diminution on carbon emissions rather than millions of tailpipes. 

We think we have the ability to know what our electricity needs are going to be well into the future and signed a power purchase agreement so that we’ll be able to get pricing that’s not that much more expensive than – and we also enable, like I said, you know, we have a mission here, more than just the business.  And it enables this renewable industry, we think, to really move to the next level.  You know, I think a competitor comes in and tries to compete on that price – at least until oil is no longer part of the equation, they’re not going to be able to undercut us that much and we’re also going to try to be the best service company in the world so that people will want to use our services compared to someone else’s.

Q:  David Comas.  A question about – a little bit about the logistics on the batteries:  Israel is small, and you’re never really going to be more than 100 miles from anywhere.  Denmark is not quite as small, but you’re still not going to be more than 100 miles from anywhere.  Australia is another story.  In the United States, like it’s Fourth of July weekend and everybody goes to the beach, and everybody’s going to come back four days later; how many extra batteries – what’s the ratio of batteries and cars to batteries that you have to have in storage in order to allow for those type of demographics, and is it different for Australia as opposed to – well, I guess in Australia, you’re not going to do it – but have you looked at the model and how does it change for big versus small?

MR. GRANOFF:  Yeah, we don’t know precisely the answer to that question.  It’s something that we’re modeling now and we’ll figure out, but it’s not a lot.  One of the reasons it’s not a lot – in other words, we don’t need, you know, 2 batteries for every car in the population; we maybe need 5 percent more batteries than the number of cars in the population.  And one of the reasons is that, I said that you can’t do – that fast charge doesn’t scale.  However, in industrial settings, you know, fast charge is possible and we’re going to have a fast-charge capacity at the battery exchange. 

So the battery that gets dropped off fully depleted at an exchange station is ready to go into another car 30 minutes later.  And they’ll cycle through, so you need, basically, 30 minutes of capacity – however many cars cycle through in 30 minutes, that’s how many batteries you’ll have to have on hand.  Now, in particular instances, like Fourth of July weekend, you know, ultimately, the software will account for all of these, you know, account for sporting events or cases in which large numbers of vehicles that aren’t usually going on a particular route are going to do that, and, you know, within a short period of time, with all of the statistics available, I’m sure we’ll be able to figure out how many batteries need to be where in order to make sure that everybody gets – but, again, there aren’t too many instances like that where you have large numbers of cars doing more than 100 miles at a time in one location, and I think we’ll know when those happen and we’ll be able to deploy the batteries accordingly.

Q:  I’m Phil Collins, Washington attorney.  Have you thought of looking for introduction with fleets like taxis or share-cars or corporates – is there a minimum market penetration that you need in order to set up your program?  What about different types of models?  Are you going to have a variety of two-seater to vans or maybe even –

MR. GRANOFF:  Stop there for now, because I won’t remember this all.  Pause for a moment and I’ll –

Q:  Are you going to be moving with – do you have smart – a certain amount of smart technology with GPS – okay.

MR. GRANOFF:  Okay, yeah, yeah, one at a time.  Taxis are a great idea for us, because, as I said, we’re after the cars that drive the most miles and no cars drive more miles than taxis.  So taxis would be a terrific place for us to deploy, and yes, we’ve had conversations along those lines in a lot of places.

Q:  Could the taxi companies just avoid you and just have their own batteries and their own battery exchanges? 

MR. GRANOFF:  They could, but, again, it’s another business.  They would have to own all those batteries and set up the battery exchange and, you know, in most cities, taxis are not owned by one central source.  You know, they’re owned either by the drivers or by a bunch of different dispatchers, so it’s a big business to get into that we don’t think they’re going to get into.  But if they do, great, because, again, anything that reduces our oil demand, we’re for.

MR. PUGH:  You know, I think we better give Michael a break here.  His boss, Shai Agassi, said that once you have a mission, it’s hard to go back to having a job.  And Better Place is certainly a company with a big mission.  I want to thank Michael again for coming tonight and thanks to everybody for all those questions.

MR. GRANOFF:  Thank you very much.

(Applause.)

(END)

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