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Electric-Car Company ‘Better Place’ Fails To Make It in the Start-Up Nation

Israeli battery-swapping venture burns through millions in capital without changing the world. What went wrong?

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Brian Thomas with his Better Place car, which he is using to criss-cross Israel before the network shuts down. (Daniella Cheslow)
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Better Place has been tight-lipped about its tumble. The spokespeople for the company have lost their jobs, and Agassi is no longer in the picture. He only vaguely referred to government hurdles in his speech at the President’s Conference in mid-June. But Tami Chotoveli, Agassi’s girlfriend and a former company spokeswoman, offered her take via a Facebook note that Agassi endorsed. She said Better Place paid about 750 million shekels (US$206 million) in taxes and got little help from the Israeli government. She also pointed to Tesla Motors, the luxury electric car company based in California that got a loan for half a billion dollars from the U.S. government, repaid it, and posted its first profitable quarter the same week Better Place pulled the plug.

A spokeswoman for Israel’s Tax Authority could not confirm or deny the taxes Better Place paid. But she noted that electric vehicles have enjoyed a low rate of only 8 percent purchase tax, set to expire at the end of this year. Regular cars are taxed at 83 percent, with deductions for those with fewer emissions.

Gartner, the researcher, argued that the tax complaint was a cop-out. Tesla succeeded where Better Place failed because it was a less ambitious project, he said. Rather than blanket California with swapping stations that cost half a million dollars apiece to build, Tesla has relied on cheaper plug-in charge spots. Only in June, after posting profits, did Tesla begin exploring battery-swapping options.

One lesson for electric-car entrepreneurs in Israel may be not to forget the environmental movement. Yael Cohen Paran heads the Israel Energy Forum, devoted to promoting sustainable energy in Israel. She said Agassi didn’t seriously approach the environmental movement and that his green argument was unconvincing.

“One of the things I was outraged by is them saying we want to buy all our electricity from renewables,” said Paran. “I didn’t see Better Place putting their money into power plants so there would be more solar energy for their cars. You’re driving on coal instead of gasoline.” Agassi, for his part, has claimed in past interviews that Israel declined to give his company swaths of land in the Negev for building solar fields.

Thomas, the British computer importer, said he understood why Agassi lost his job. And he said he will probably file a claim against the company. But he also said the service was “gold-plated,” with polite, responsive troubleshooters available at all times. “The sort of depressing part of the collapse is they had just started selling.”

The company is now in the hands of two government-appointed liquidators. One of them, attorney Shaul Kotler, said “not a few” investors have contacted him to inquire about buying the Better Place assets in Israel. Kotler said it’s an attractive package, deeply discounted, and that he expects offers to range between “dozens to a hundred million dollars.” Kotler said the courts agreed to extend Better Place’s operations to mid-July to allow time for a buyout. “We’re trying not to waste money, but if we stop it the cars will not be a going concern,” he said.

Massachusetts transplant Yosef Abramowitz is one of those inquirers. He is known as “Captain Sunshine” for building commercial solar fields in Israel and the developing world. He said he would urge the government to step in with tax credits, preferential parking, and possibly even to run the infrastructure Agassi installed, potentially with help from the Better Place drivers. “It’s quite spectacular to burn through $850 million and fail,” said Abramowitz, whose two businesses have raised more than that. “But I don’t want the lesson for Israel to be ‘don’t dream big.’ ”

Doron Vadai, who imports cars through Clal Motors, said there are only a handful of Nissan or Chevy electric cars on Israeli roads. He said he is working to import electric buses for the Dan public transportation company. Whatever its failings—and maybe, because of them—he said, “Better Place raised awareness of the issue of electric cars.”

In late June, Better Place’s system was still running. One Tel Aviv-based start-up called “Just Park It” created an app for drivers to exchange their charging spots should the swapping stations shut down. In this way, a driver who lives in Tel Aviv but works in Jerusalem can charge his car over the workday and have enough fuel to get home.

Thomas, meanwhile, is eagerly checking into far-flung battery stations on Foursquare, like in the northern Arab villages of Baqa and Eilaboun, getting to all the spots on the network before someone pulls the plug. He considers himself lucky—his wife drives a gas-powered car, and he can take that for long trips. But he hates the idea of paying for gas.

“I don’t regret buying it,” Thomas said as he steered his silent car through Tel Aviv. “I enjoyed driving an electric car for a year. I would do anything to keep driving it.”


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Electric-Car Company ‘Better Place’ Fails To Make It in the Start-Up Nation

Israeli battery-swapping venture burns through millions in capital without changing the world. What went wrong?

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