Not long after firing its replacement CEO, the Israeli electric car company Better Place has alluded to Forbes that it will likely close its its North American and Australian operations. Evan Thornley was the CEO of Better Place in Australia and was hired to be the global CEO of Better Place soon after the company’s visionary founder Shai Agassi was sacked last October. A third and acting CEO is now in place to put the pieces of the ailing startup car company back together. In an aim to cut costs, Forbes is reporting that Better Place‘s global ambitions to electrify the world have now shrunk to two countries only – Israel and Denmark – as Better Place looks to funnel its investment resources into these two markets. Better Place was founded in Silicon Valley but is headquartered in Tel Aviv.
Agassi’s idea was to push electric cars into the market by providing quick switch electric batteries and switch stations so that electric car drivers could overcome range anxiety. Electric cars can only drive so far before they need a recharge which can take hours. Dozens of these switch stations are now built in Israel.
But after the firing of Agassi last year, Better Place could no longer hide its financial troubles. Despite hundreds of millions in investment, the company was not able to get its car on the road. Only several hundred were sold in Israel as the public was slow to pick up on the idea that seemed to be more costly than driving a petrol-fueled car. This was something Better Place had promised would not happen once they made their cars marketable.
Forbes had an email exchange with Susanne Tolstrup, Better Place’s director of communications. She said: “In the short term, the company will focus its energy and resources on its two core markets, Israel and Denmark.”
From the Palo Alto office John Proctor wrote: “We plan an orderly wind-down to fulfill all our commitments, so it may take some time.”
Israel and Denmark, two small “island” countries are considered the perfect launch spots for Better Place cars. Now Israel has offered an attractive leasing program for about $500 a month, including charge which has attracted about 100 buyers in January.
To date some $850 million in backing money has gone into Better Place from companies like General Electric, Morgan Stanley, HSBC and Israel Corp. Operations have been in Australia, Canada, China, Hawaii and the San Francisco Bay Area.
Since its inception the company has lost more than $500 million. The company has not been able to secure buyers despite the millions it has poured into marketing the idea. The company even built an education and test drive center north of Tel Aviv which has attracted celebrities and hordes of Israeli tourists eager to get their shot and brag rights about testing the Israeli-conceived electric car which has actually been built by Renault. It’s a service to the environment but other electric car projects like the Twizy might reap the rewards.
With interest in French cars sagging in recent years, perhaps Better Place could have been in a better place if it had struck a deal with a German brand like BMW or Volkswagon? Israelis pay a lot of money for cars anyway because of the 100 percent import tax. Those buying a luxury brand (which the Better Place car is to some extent) expect some sort of wow factor from the car they drive. The Renault does not offer that appeal. It looks like a mom and pop car.
If anything Better Place has set a good example that new startups can avoid. Read this Smartcompany story on tips that newcomers can glean.
Still I have faith that large Israeli companies will look into adding Better Place cars into their leasing fleet. This is one way the public can overcome the pollution caused by an overabundance of cheaply leased cars in Israel, with some programs offering unlimited fill-ups.