Electric car company gets big investment

This past week marked a significant step for an electric car and program company called Better Place as they were able to obtain an investment by HSBC (a large and well known investment bank) to the tune of $350 million. It also valued the company at $1.25 billion which means that this company is quite large by any means and very large relative to other start-up electric car companies.

Better Place has developed a replaceable battery and they plan to have battery exchange stations, instead of gas stations. The plan is that you buy a car at a subsidized price and subscribe to a monthly plan, similar to a cell phone where you pay for the service of using these replaceable batteries. Renault, a major European automobile manufacturer and owners of Nissan have already partnered with Better Place and will produce the cars. The cars will also be capable of being plugged in to an outlet so that you don’t always need to replace batteries. The hope is that exchanging the batteries will not be anymore time consuming than it currently takes to fill your gas tank.

They plan to launch in select cities around the world starting at the end of 2011. If this works than it has the potential of revolutionizing the auto industry and energy industry to an extent. I think this program is very different from all other alternative fuel ideas for automobiles in that it does not focus only on the alternative fuel itself but also the infrastructure that would be required for any change to work.

This investment is significant for a few reasons though. One reason is that it shows that companies are once again starting to take on risk and this is very important for the global economy to get back to expansion. Another reason is that it is one of the very few companies in this new and infant industry of alternatives to the gasoline powered automobile that have reached a high level of credibility by having such reputable companies like HSBC and Morgan Stanley invest in them and this is rare for a start-up in this realm. Finally, it gives a real chance for this company to actually make good on their plan of changing the way the automobile and energy industries are shaped. This final point was not always and is still not a certainty that change will occur because the large oil companies like Exxon Mobil, BP, Chevron and others are very rich and do not plan go away without a fight.