January 21, 2008 2:00 am

Israel relies on electric cars to cut oil imports

Israel will set out plans today to cut drastically its dependence on oil imports, with a private-sector initiative for a nationwide electric car network.

The privately funded plan to build 500,000 recharging points and battery-swap stations for electric cars in the next 18 months has the backing of the government and president, Shimon Peres. Renault and Nissan will develop an electric car with a range of more than 100 miles to be mass-produced from 2011.

Mr Peres told the Financial Times that the plan would cut Israel's oil imports by half within a few years, and that Israel could cut the remainder by building solar energy-generating plants. "In one decade, we will not need oil."

The infrastructure will be built by Project Better Place, a US start-up, which has raised $200m (€137m, £102m) for the purpose, enough to cover the initial stages. Further roll-out of the infrastructure and vehicles is expected to add about $800m to the cost.

Electric cars have failed to find mass-market acceptance due to their limited driving ranges, high costs relating to their batteries, and small production runs. Project Better Place, founded by Shai Agassi, an Israeli-American, is championing a business model that would see the costs of batteries borne by infrastructure companies.

Israel's government this month approved tax incentives for electric vehicles.

The plan's government backing could prove a sensitive point in the region's oil-rich countries, where Renault does business; in Iran it assembles low-cost cars in a joint venture. The company was not available for comment ahead of today's announcement.

Mr Peres made it clear that the aim of the project was both economic and political. "The two greatest problems today are oil and terror," he said. "Oil is the greatest polluter, and the great financer of terror. [Oil-producing nations] make a mockery of democracy."

By contrast, he saw a bright future for solar energy to replace oil imports: "The sun is permanent, democratic, friendly and it does not pollute."

Project Better Place, which has held talks with carmakers other than Renault and Nissan, will also offer prepayment packages for recharging that it claims will bring down the cost of electric cars. It likens itself to the early infrastructure companies that made widespread use of mobile phones possible.

Caroline Öhrn, senior research analyst at Venture Business Research, said: "This may finally kick-start adaptation on a larger scale." The take-up of electric cars had been inhibited by the lack of recharging sites, she said. "It's great to own an electric car, but its use is limited if you're only able to recharge it at home."

If successful, the Israeli project may also be rolled out in other countries.

Electric cars are regarded as a "green" alternative to petrol or diesel. Project Better Place has calculated that if Israel's fleet of 2m cars were all electric, they would require 2,000MW of electricity per year, which could be provided by a one-off investment of $5bn in solar plants.

Analysis: www.ft.com/ energysecurity

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