If there’s ever a reason why you should avoid investing in the electric-car revolution it’s a start-up called Better Place L.L.C.

Based in Silicon Valley, the company is negotiating with governments and car makers to set up networks of charging systems for electric-car batteries.

The New York Times ran a story today about how Hawaiian Electric Company endorsed the Better Place system of rechargeable stations and swappable batteries. Better Place already has garnered endorsements from Israel, Denmark, Australia, Renault-Nissan and a coalition of Northern California.

In essence, the endorsements constitute permission for Better Place to install its system.  Here’s how Better Place makes money for investors:

Drivers pay to access a network of charging spots and conveniently located battery exchange stations powered by renewable energy.
– Drivers pay for the miles they drive.
– Cars are made much more affordable—even free in some markets—by the business model’s financial and  environmental incentives to add drivers into the network.
– Better Place operates the electric recharge grid that brings it all together.
– The company operates a grid of wind and solar power that resells excess back to the public grid.

But can this really work?  Do the numbers make sense? And does the downward mobility of most Americans constitute a real market for electric cars and companies like Better Place?

We think the answer is “no” and here’s why…

As of 2007, when gas prices were on the rise, the price premium for a hybrid (a gas-electric vehicle) was about $5,000 versus a conventional gas-burning vehicle. Even at those higher gas prices, the break even for a hybrid compared with gas was six to 10 years. Today, with gas down 2005-2006 levels, we can only estimate that the break even for a hybrid would be extended to 10-15 years.

And that’s for a hybrid. As Detroit’s Big Three hammer out plans for greener cars, we still don’t know what they will cost. Consider, however, the immense expenditure of retraining mechanics to take care of these things and the other equipment necessary to maintain electric vehicles; the beefy profit margins that shareholders have been accustomed to for decades; and that as Americans load up these little electric beasts with 14-way adjustable leather seats, 12 air bags and entertainment systems for the kiddies the battery’s range can easily drop from 100 miles to 75 miles. Suddenly, a four-cylinder Honda Civic makes a lot more financial sense.

Still, the mass delusion of electric-car economics marches on…

The founder of Better Place, a former software executive named Shai Agassi, estimates that the projects in Austria and Northern California would require about $1 billion to build.

The Better Place idea gets even loonier when you consider that the company will offer battery swaps at these stations. Better Place claims that in the time it takes for a conventional car to fill a tank of gas, you can change out your dying battery for a fresh one.

For anyone who has had a car serviced lately, you know this is one of the biggest jokes you’ve ever heard. Can you imagine employing a team of professionally trained technicians who can do this? Heck, you can’t even get an oil change in that amount of time at the so-called quick-lube places — and we don’t see any measureable difference in complexity.

(Maybe if the company also had mini-marts on site that sold cigarettes, beef jerky, donuts and soda they could squeeze out a profit.)

Better Place comes along when America’s economic problems may be deeper than anyone suspects.

As Better Place expects folks to pay extra for the privilege of saving the planet, the cost of college is becoming completely out of reach to many Americans – dramatically inhibiting their ability to shell out this green premium.

A new biennial report from the National Center for Public Policy and Higher Education found that college tuition and fees surged 439% from 1982 to 2007, while median family income rose 147%.

Middle-class and low-income Americans may find themselves mired in a cycle of poverty due to escalating prices of higher education. This does not bode well for electric vehicles or charging stations with break-even economics of at least 10 years (or even five years if you want to consider an eventual economy-of-scale from volume production).

Patrick M. Callan, president of the center, was quoted as saying “When we come out of the recession, we’re really going to be in jeopardy, because the educational gap between our work force and the rest of the world will make it very hard to be competitive. Already, we’re one of the few countries where 25- to 34-year-olds are less educated than older workers.”

The report, “Measuring Up 2008,” reached some alarming conclusions.

Among the poorest families the per-year net cost at a public university was 55% of median income, up from 39% in 1999-2000. At community colleges that cost was 49%, up from 40 percent in 1999-2000.

That means a large portion of our population will simply be priced out of the electric car revolution.

If you go to the Better Place web site, they have a social networking section where the Birkenstock crowd crows about all the good work being done by the company. My guess is, however, that many of these people have already paid for their college education.

If we were going to bet on a new generation of fuel-efficient vehicles, we would go with diesel and conventional gas engines. For the time being, electric cars are another manifestation of mass hysteria.