Better Place car drives out of a battery-swap station in the Netherlands – Photo: Better Place
At the end of her visit, the receiver gave the company two weeks to decide who stays and who goes.
The news came earlier than anticipated. Last Wednesday, the provisional liquidators of the company — attorneys Sigal Rosen-Rachav and Shaul Kotler — announced that most of the company’s 209 employees would be dismissed immediately, apparently without a preliminary hearing.
At least two parties have expressed interest in keeping the Better Place system operational. One of these parties is the Israel Electric Corporation.
We spoke with several company veterans, and the general sense we got was that this was not a case of money being thrown away for nothing.
“The electric car is something that will happen eventually, because that is the future,” said one of the company’s senior officials, who is not yet ready to pack his bags.
“Today, in retrospect, everyone is wiser and able to point out the mistakes that were made. Maybe it was wrong to build infrastructure for a large number of vehicles right off the bat. The global thinking may have been premature. Maybe the setup should have been spread out not over three years, but over eight years. But if we had gone slowly, it is unclear whether we would have been able to raise the capital that we raised for the global system.
“Perhaps the board of directors should have appointed a professional as the CEO instead of [Shai] Agassi, the man with the vision. Maybe the vehicles should have been subsidized at first, to create a wider user basis and that way spread the word, because our clients are our best spokespeople. They don’t know what is going to happen now, and that is a problem. But when the company was functional, we never heard any complaints.”
One of the original employees who took part in building the system said that contrary to the industry talk of home battery charging, Better Place’s switchable battery system was the right direction.
“You can’t charge a battery in a matter of minutes. Even if the range is 400 kilometers [250 miles], and it will be that much eventually, the battery empties and it needs to be recharged. No one will stand around for hours to recharge the battery. It doesn’t make sense. It makes sense to switch the battery in a matter of minutes,” he said.
According to this employee, the work done by Better Place paved the way for the next electric vehicle entrepreneur.
“Whoever comes after Shai Agassi will reap the benefits of the Better Place experiment, because the technology will be more mature and there will be a wider range of vehicles,” he said.
“The Renault Fluence doesn’t suit everyone. It will happen because there will be no other choice. The world is going in a green direction. Most people don’t need a car with a long range for everyday use. People don’t drive 100 kilometers [60 miles] in a day. For them, and they are many, the existing technology with the limited battery range is perfectly sufficient. Shai Agassi may have been ahead of his time, but only by a little. The technological adjustments are just around the corner, and people will soon come back to this.”
All the employees that we spoke with said they had no regrets. Some expressed a feeling of missed opportunity for a project that deserved to succeed, for the sake of everyone.
“We are still enraptured with the vision of an electric vehicle,” said one employee. “We drive these vehicles ourselves, and it will be difficult to go back to gasoline-powered cars. It seems so illogical now.”
The day after
Unlike the workers, some of the Better Place customers felt very cheated this week.
Better Place offices in Glilot – Photo: Yehoshua Yosef
“You wake up one morning and hear that the company is going under,” said one customer, who asked to remain anonymous.
“But a week ago there was an advertisement in the paper that talked about a down payment of 25,000 shekels [$6,800] plus unlimited kilometers [the company charged according to kilometers traveled]. When I went to the company’s sales office, they admitted that the company was in trouble and they made it sound as if they were looking for outside investors and that they would find a solution.”
It turns out that the famous Israeli “everything will be okay” attitude worked for Better Place as well. Some of the customers were told that things were about to change, and that new investors would pump additional funds into the company and the project would gain speed. It is unclear what motivated the various individuals within the company or why its representatives behaved the way they did, but one thing is clear: Hundreds of Better Place clients are now left without anyone to turn to.
According to management assessments, some 350 Israelis own Better Place vehicles, out of a fleet of 950 cars in Israel. That is not a small number. Several dozen apparently ordered new cars recently and are now stuck, having already paid an advance of tens of thousands of shekels.
Better Place is made up of four Israeli subsidiaries and several additional foreign companies. The liquidation process began in Israel, and according to the provisional liquidator, the company currently has $8.9 million in cash. Does that sound like a lot? Of that sum, $2 million have already been earmarked for salaries, and just as bad, up until now the company has been going through its cash at a rate of $7 million per month.
“The personnel need to be reduced dramatically,” the liquidator declared in court. The meaning is that hundreds of employees are about to be let go.
Another problem facing the company has to do with its ties to French car manufacturer Renault. Better Place tied itself to Renault with thick legal chains. Among other things, the batteries that Better Place supplied to its customers, which legally belong to Better Place, were listed as collateral owed to Renault. If Renault and its representatives in Israel wanted to, they could collect the batteries, leaving the Better Place cars as nothing more than garage decorations. But they don’t want the batteries. Renault’s attorneys said in court that such a move would be impractical and that Renault wants to be part of the solution. And beyond that, confiscating the batteries would impair Renault’s image.
This brings us to one of the bright spots in this affair: Prominent figures in the car industry said this week that despite the numerous problems they foresee as a result of the company’s collapse, there is no doubt that Better Place invested a lot in charging stations across the country. Representatives of the Israel Electric Corp., which played an important role in the charging system, said that the charging stations were still operational and were expected to continue to cater to customers.
This is extremely important, especially in the future, when other car manufacturers begin bringing more electric and hybrid models to Israel that could potentially use the existing charging stations. This leaves a speck of hope for electric cars, and perhaps with its death, Better Place will give life to the tiny, faltering electric vehicle industry.
Money vs. vision
The saddening failure of Better Place is all the more infuriating when one considers the smashing success of Tesla Motors, the American electric car manufacturer. We are in the Middle East, while Tesla is headquartered way out in California, a state that offers greater incentives to automobile makers who produce vehicles that pollute less.
During its most trying times, Tesla received a half billion dollar grant from the American government, an infusion of cash that enabled it to weather its roughest period. Now Tesla is thriving and it is expected to begin the process of making its shares available to Wall Street soon. As of now, Tesla is valued at more than $10 billion, more than veteran automobile giants Fiat or Mitsubishi.
Despite the temptation, it is unfair to compare Better Place with Tesla. The American company seeks to appeal to an entirely different customer base and manufactures luxury electric cars, while Better Place sought to appeal to the middle class, which comprises most of the market. Tesla wants to turn a profit, while Better Place wanted to change the world.
While Better Place was able to offer customers a Renault Fluence by dint of its agreement with the French auto maker, Tesla sold cars that it manufactured itself. These automobiles were tailored and customized to the specifications and needs of its multi-millionaire clientele. All of a sudden, Tesla made people think that electric cars were something that could sell. One of its most successful cars is the Model S, which is sold for NIS 231,000 ($62,400). This is pricey by American standards. For that money one can buy three Mazda 3s. Nonetheless, Tesla’s business model works. Its least expensive Model S can drive 334 kilometers at a maximum speed of 90 kilometers per hour until the next charging.
More expensive editions of the Model S can reach a maximum distance of 426 kilometers at higher speeds. While the travel distances in the U.S. are much greater than they are in Israel, this number is still much higher than that offered by Better Place’s battery — 100-120 kilometers until the next charging. It is also worth noting that in the U.S. anyone can charge their car battery from any electrical outlet. In Israel, a special cable which needs to be plugged into a separate energy grid is required. Tesla guarantees its customers that car batteries being charged will reach 50 percent power in 30 minutes.
Better Place’s first CEO Shai Agassi – Photo: Yossi Zelliger
For a while, I have submitted repeated requests for Shai Agassi to go on the record. Since he was dismissed in early February, he has refused to comment on the situation. When I asked him for a response, he was diplomatic in turning me down. Even after Better Place submitted its request for liquidation, Agassi still refused requests for an interview. Agassi is angry with the press. He accuses it of colluding with the established car importers in helping to sink his project, in effect robbing him of what could have been his life’s greatest achievement.
Despite his reticence, Agassi did agree to briefly address a few issues in corresponding with me through his Facebook account.
“Ilan, did you ever check how many of the advertisements in the newspapers are car advertisements?” he asked me.
“Did you ever check to see how many press junkets to Europe or South Korea or a car exhibition at Shanghai or any other destination are taken by the automotive correspondent for Ynet or TheMarker or Calcalist, all at the car importers’ expense?
“When an automotive correspondent receives the order from above to bury Better Place, he takes a test drive of our car and then writes, ‘There’s no room for a backpack in the passenger’s seat,’ and ‘The car doesn’t drive well on steep inclines.’ On the other hand, a Jerusalem Post reporter who wasn’t treated to the same largesse from the car importers wrote that this was the best car he had test-driven all year. Don’t get journalistic concepts mixed up.
“This isn’t fair play. It’s the [Israeli] automobile market.”
Agassi claims that despite the considerable media attention showered upon his project in recent years, he has long since stopped serving the interests of others.
“This serves the interests of the newspaper, not me,” he wrote. That was the end of our correspondence. Agassi didn’t take me up on my offer to use our newspaper as a forum in which he could provide a detailed account of what went on behind the scenes of one of the largest, most ambitious private enterprises that has ever been tried here in Israel.
‘An unfair game’
On that same day, Agassi’s significant other, Tami Hotoveli, posted a notice on her Facebook page.
“Allow me to confuse you all … with some facts!” she wrote. Hotoveli has served as Agassi’s unofficial spokeswoman. It is as if his words were typed out of her keyboard.
“Renault sold the Fluence to Better Place at a higher price than the one that Better Place demanded from the customer,” she wrote. “Obviously this package includes the electric battery. Better Place tried to make up for the losses it incurred by using monthly contracts, which cost the individual customer an average of $150 per month (including electricity costs). The idea was to cover the expenses in the first two years (and not to turn a profit). In time, as prices would drop, then we would begin to make money.”
On her Facebook account, Hotoveli claims that the state contributed nothing “toward assisting in this national endeavor.”
“On the contrary, Better Place paid NIS 750 million [$203 million] in both direct and indirect taxes to the treasury throughout its five-year lifespan,” she wrote. “That’s NIS 750 million in taxes from an initiative that didn’t even generate one cent of profit. This has to be an all-time low for the Finance Ministry.”
As for customer complaints that Better Place was a monopoly because it was impossible to charge the batteries anywhere else except for the company’s offices, Hotoveli refuted these claims.
“Every customer had a charging station installed in their home,” she wrote.
“The customer didn’t pay anything for it, neither for the station nor for the electricity from it. Also, the customer could have charged his car at thousands of stations across the country. Any customer could have purchased a cable that would have enabled him or her to charge at every electrical outlet. This talk about ‘a charging monopoly’ was fabricated by the car importers who were fearful over the future of their own monopolies (for reference, one can read about the battles to break the car import monopoly that have been going on for years).
“The demand for a privately owned charging station (which would be registered with the municipality’s land registry office), as if it were the equivalent of widening a balcony, caused a delay in supplying these stations, particularly in the center of the country, where most people don’t park in their own private garages attached to their villas. The charging stations needed to go through an 18-month registration process on top of the time it took to build them. In many instances, this prevented the construction of stations in locations that were convenient to the public.
“Let us take the example of the gas station near the power station in Hadera, a perfect location for a station that offers battery replacement. It was here, of all places, that the local authorities denied permission to build the station because the restaurant at the gas station closed off its balcony without permission from the authorities. What does that have to do with us? Only the licensing gods have the answer to this. The result? There is no charging station at any point along the coastal highway.”
Agassi, who has kept mum throughout, wrote a short response to the post: “I couldn’t have put it any better myself.”
View original Israel Hayom publication at: http://www.israelhayom.com/site/newsletter_article.php?id=9653