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Better Place: what went wrong for the electric car startup?

After selling fewer than 750 cars in a major initiative in Israel and losing more than $500 million, the company’s experience shows that electric cars are still not ready for primetime

Renault Better Place car and charging point seen in Tel Aviv. The much-hyped company has failed to deliver on its promises. Photograph: carlos van as/Demotix/Corbis

If you want to sell electric cars, Israel looks like a great place to start. It’s a small country, with most people clustered around Tel Aviv and Jerusalem. Gasoline costs more than $7.50 a gallon, and oil revenues help support Israel’s Arab foes. So it’s easy to understand why Shai Agassi, an entrepreneur who was born in Israel and made a fortune in Silicon Valley, chose to launch his Better Place electric-car company in Israel, while preparing plans to expand in Europe, Australia, Japan, China, and the U.S.

What’s harder to understand is why things have gone so badly. Better Place, which staked out its position in the electric car market with an innovative battery-swapping technology, has sold only about 750 cars in Israel, while piling up losses of more than $500 million. Agassi was forced out of Better Place in October, his successor as CEO quit in January, and the company has put its global rollout on hold. Better Place needs to raise more money this year, and that won’t be easy, insiders say.

Start-ups often stumble, of course, but Better Place’s woes raise questions that matter to anyone who cares about electric cars and their future in a low-carbon economy. Has Better Place sputtered because of its own mistakes, or are the company’s difficulties a sign of the broader challenges facing electric cars?

To find out, I spoke to company officials, industry experts, and electric-car executives at rival automakers. And to get a sense of the Better Place driving experience, I took a test drive in the company’s all-electric Renault Fluence EV during a recent trip to Israel, traveling 120 miles round-trip from Tel Aviv to a kibbutz in the Negev Desert.

Agassi, a hard-charging, charismatic software executive, launched Better Place in 2007 with a bold goal: To help end the global auto industry’s reliance on oil. Since then, Better Place has raised about $850 million — an astonishing figure for a start-up — from such sophisticated investors as HSBC Group, Morgan Stanley, General Electric, Vantage Point Capital Partners, and the conglomerate Israel Corp., its biggest shareholder.


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