Shai Agassi has a plan for supplying free electric cars to the world. Not free as in freedom, but free as in free beer. However, the project also has a ecological rationale.

Project Better Place introduces the topic:

“How to make the world a better place?” …One electric car at a time.

The planet is running out of natural resources and we are also running out of time – Project Better Place has the vision, plan, investors and the partners to make scalable electric transportation a reality on a global scale and reduce the world’s dependency on oil.

Project Better Place will install and operate an Electric Recharge Grid consisting of charging spots and battery exchange stations.”

Part of the rationale is explained in his blog: “The cost of the average used car in Europe is now cheaper than the cost of gasoline to drive it for a year”

This justifies a model whereby the car is supplied for free, but people pay for the electric energy, from a grid of batteries that no longer have to operate on oil.

Chris Anderson offers the summary of the argument:

“That’s why “free” cars make sense: because the purchase price is now a small fraction of their lifetime costs. Shai’s company is taking a bigger view of the business they’re in–rather than selling cars, they’re selling personal transportation, and charging a rate proportional to use. When fuel seemed nearly free compared to price of the car, companies sold cars. Now cars seem nearly free compared to the cost of the fuel. Thus an opportunity for a car company that thinks different.”

The detailed economic case is mady by Shai on the basis of rising oil prices:

“an average clunker across Europe, and there should be 100M or so cars in Europe over the age of 8, is probably worth less than $5,000 to buy. Refueling it for a year at 20 mpg, which is where the European fleet was on performance 10 years ago requires an average of 600+ gallons. As a result the average used car owner will pay more than $5,000 for car energy supply for one year – more than the car is worth. As Europe urbanization and salary diversity pushes more people into suburban and beltway living, at least 30% of the population drives 30,000 km a year. Those people, who are the ones that cannot afford the expensive living in the city, now need to either stop driving private cars or pay upwards of $7,000 for gasoline every year. Only we never make that decision ahead of time, we take the hit 50 times a year at the pump – death by a thousand credit card cuts…

The cost of the average used car in Europe is now cheaper than the cost of gasoline to drive it for a year– talk about razor and blades businesses. Big oil still can’t supply the global demand for this concentrated energy liquid, yet the US prices gasoline less than its other concentrated energy liquid – Red Bull – when we compare on a gallon-to-gallon basis.”