Building an EV Ecosystem: Why Tesla Will Likely Succeed Where Better Place Failed

When Apple launched the iPod in 2001, its sleek user interface and capacious memory revolutionized the portable music-player industry. Followers, such as Microsoft with their Zune MP3 player, might have proved to be competent players, but it was the iPod that exploded on the market. Where was Sony? What happened to Microsoft? Both were barely on the radar, of course.

The ace up Apple's sleeve was building the entire music player ecosystem. Without iTunes, the iPod would have made a nice paperweight, but with it, the device became truly useful; ready to be loaded up with an extensive library of songs, and quickly finding a mass market. It's hard to argue the iPod would have been as great a success if Apple had only addressed the hardware.

Such is the story with Tesla. It's not enough just to build a great electric car, they've shown that in order to make the product truly useful, they needed to create an entire EV ecosystem around it. They started with industry-best range, then added supercharging stations, and last month announced they will augment these with a battery swapping option, too. This will allow Model S owners to pull in, switch batteries and drive off in under 90 seconds - faster than a visit to the gas pump!

While other car companies tentatively launch their own EVs, the reality is, most are in wait-and-see mode; waiting to see if governments will set energy policies to make EVs more attractive, waiting to see how extensive the charging infrastructure becomes, and waiting to see if consumers actually want them.

It appears, though, that Tesla has accepted it's incumbent upon themselves to make consumers want them. Furthermore, they know they'll be more successful in making consumers want them if they address the known pain points, rather than waiting for someone else to do that. With EVs, those pain points are range and charge time.

That the latest upgrade to Tesla's ecosystem is a battery swapping option is somewhat ironic, given that the only other player in swapping technology, Better Place, filed for bankruptcy in May of this year. Better Place's demise, perhaps, can be explained similarly to the digital music-player analogy, in that the company just didn't control the business ecosystem within which it operated. And that's important, for the following reason.

The EV industry is still in its early days, and standardization of batteries isn't here yet and probably won't be for some time. So, for Better Place, it was most probably a hard sell to get car companies interested in locking in to their proprietary battery swapping system when a better mousetrap might be around the corner.

Furthermore, to save costs, most auto companies experimenting with electrics have been retrofitting existing models to turn them into EVs. Because of this, many EVs are not being built around the battery, rather the battery is being built - wherever it fits - around the vehicle. And even when OEMs build dedicated EVs, the proprietary nature of the industry has meant the car companies have wanted full control over vehicle specifications, in any case.

Consequently, Better Place's system has failed to forge a standard. In fact, only one car company, France's Renault, signed up with Better Place, and they sold very few units, meaning there just hasn't been the critical mass of vehicles out there to make the expensive swapping technology viable.

So for now, the battery swapping gauntlet passes to Tesla, whose mastery of the EV industry - so far at least - is a based on a logically evolving story of handling objections and resistance to electric vehicles; and by building the ecosystem to address them:

• Get attention by building a car that is aspirational - remember, this all started with the two-seat Tesla Roadster.

• Make sure that car can go as far as a gasoline-powered car - up to 300 miles. A useful range, burying the notion that, "EVs are only viable as a second car."

• Build Supercharging stations that allow drivers to rapidly recharge to complete road-trip-length distances - for those times when 300 miles simply isn't enough.

• Augment the Supercharging stations with a battery swapping option - providing a zero-time-penalty opportunity for drivers who simply insist on being able to refuel as fast as going to the gas station.

Voila, ecosystem complete. Exceptions handled. If Tesla had started with battery swapping, however, I doubt it would have played out this way. But since they didn't, if you can afford the price of admission to the Tesla ecosystem, EV range anxiety is a thing of the past. Check out the video below to see two battery swaps in the time it takes to fill up the other car with gas.

Image Credit: Steve Jurvetson

http://vimeo.com/68832891