Web 2.0 Summit: Electric Cars

There were two illuminating interviews on the topics of electric cars, one with Elon Musk of Tesla Motors and one with Shai Agassi of Better Place. Listening to these two gentlemen, I am led to the inescapable conclusion that, even in my best moments, I am a total slacker and underachiever. Musk has established successful ventures in three industries (the Internet, personal transportation, and space exploration), while Agassi followed a successful career at SAP with some groundbreaking ideas on how we end our addiction to oil. Both believe that the future lies in electric cars, but take a quite different road to get there. Musk is building a series of viable electric vehicles that prove the technology; Agassi is proposing a total rethink of the auto industry’s value proposition. What is fascinating about the comparison is the different routes they have taken to innovation.

I remember in the 80s when a certain Robotics professor at Edinburgh University rode to work in an electric milk cart to protest the wastefulness of the internal combustion engine. Were he alive today, he would at least have the option of tearing around town in a Tesla Roadster, which is now in production. (Of course, being Edinburgh, there still wouldn’t be anywhere to park.) This awesome vehicle is all electric, goes from 0 to 60 in under 4 seconds, and can go 250 miles between charges. I want one! (But it sells for over $100k, so I’ll stick with my BMW 330 for now. A sedan is also in the works, which will be more in my price range.)

Agassi is proposing something quite different and totally radical. Electric versions of our favorite car models should have batteries that can either be charged or swapped out at the equivalent of a filling station. Simply put, you pay for the miles that you use in order to support this network; the car itself will be a smaller cost element, and may even be free. This is by analogy with the cellular industry, where you pay for airtime as you use it; the phone itself is not the major purchase. The auto industry moves from being totally product-oriented to being more service-oriented.

Both solutions use technology, and Tesla’s is certainly disruptive, but Agassi’s also changes the business model and revolutionizes the industry. Arguably, industry innovation = disruptive technology + new business model. This is not to minimize Musk’s achievement, which is already showing the way to automakers such as GM.