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Better Place toils in electric car market

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Better Place was launched in late 2007 with a bold proposition: to rid the car industry of its dependence on petrol by wiring up cities, regions, even entire countries to run cleverly networked electric cars.

Shai Agassi, its bright and charismatic Israeli-Californian founder and then-chief executive, promised to build a company with a disruptive technology that might one day grow in global reach and value to rival Silicon Valley companies such as Intel.

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The electric car infrastructure company raised more than $850m from investors including HSBC, Morgan Stanley and the Ofer family-backed Israel Corp, its biggest shareholder. It won early support from politicians such as Israeli President Shimon Peres and former San Francisco mayor Gavin Newsom, who endorsed pilots for its signature technology: the swapping of electric cars’ depleted batteries, which relieves drivers of any need to wait to recharge.

Renault, the French carmaker, promised to supply 100,000 electric versions of its Fluence saloons by 2016 to run on Better Place’s automatised battery switching networks in Israel and Denmark, the company’s two biggest markets.

Mr Agassi spoke of a future in which companies such as Better Place might even offer customers cars for free with any recharging contract, like mobile phones. Start-Up Nation, a best-selling book about Israel’s entrepreneurial economy, said that if Better Place succeeded, its impact “might well transcend that of the most important technology companies in the world”.

But five and a half years later, the company’s sales only recently passed 1,000 cars – nowhere near the tens or hundreds of thousands once spoken about by Mr Agassi, who was ousted as chief executive last year. In Israel, about 150 of the 500-odd cars it has sold to date have gone to staff.

Earlier this month Better Place said it was exiting the US and Australia and would now focus on the two countries where its networks are biggest: Israel and Denmark.

Better Place has lost more than $500m to date, according to Israel Corp’s accounts, and is not saying when it will turn a profit. When pressed on the point, the company said: “We will need to be self-funding at some point, but our investors do not think being self-funding is the only measure of success in the short term.”
FT Archive: Electric cars are all the rage in Israel
An electric car rechrages its battery from a stand at the parking of Better Place, a electric vehicle services provider, in Glilot north of Tel Aviv on January 17, 2011.

Better Place aims for a nationwide laboratory for plug-in vehicles

Dan Cohen, the group’s third chief executive after Evan Thornley resigned last month, told the Financial Times last week that the company remained “ambitious” and was on a growth trajectory, pointing to the 102 cars it sold in Israel in January, its largest monthly number to date.

“We believe we will have a good uptick [this year],” Mr Cohen said. “The numbers will speak for themselves.”

As Better Place downsizes – it has already cut more than 40 per cent of its staff – and refocuses to cut its losses, a picture is emerging of a company with big ideas that – like many other technology start-ups – stumbled during the transition from initial entrepreneurial vision to quotidian implementation.

A part of Better Place’s growing pains comes down to consumers’ scepticism towards electric cars, which are selling in smaller numbers even more than pessimistic industry forecasters had predicted.

“The whole electric vehicle sector is very slow,” says Al Bedwell, global head of powertrains with LMC Automotive, the consultancy. “The idea of taking a gamble on that and also on battery swap technology is a double gamble.”

But some of Better Place’s initial problems appear to be the result of management missteps. According to former employees of the company who spoke to the FT, Mr Agassi focused too broadly on future growth, at the expense of getting early details of the business right.
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