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Better Place Electric-Car Service: Few Users, More Turmoil

 
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2012 Renault Fluence ZE electric car, powered by Better Place in Israel [photo: Brian of London]

2012 Renault Fluence ZE electric car, powered by Better Place in Israel [photo: Brian of London]

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Much publicity, high hopes, and hundreds of millions of dollars have been devoted to the Better Place electric-car service.

Now, with an apparent dearth of Israeli customers to sign on the dotted line, the company is turning over its management.

Deputy CEO departs

The latest defection is deputy CEO Moshe Kaplinsky. The Israeli newspaper Haaretz reported his resignation last Thursday.

Kaplinksy had run Better Place Israel since 2008, and was promoted just last month to deputy CEO of the entire Better Place company.

In an e-mail to employees, he said he had been considering the move for a long time.

Charismatic founder Shai Agassi resigned in early October; he was replaced by Evan Thornley, previously CEO of Better Place Australia.

At the time, Idan Ofer, chairman of the Better Place board, said, "We owe Shai our gratitude for turning his powerful vision into a reality."

Minimal sales

While executive turnover is often a given at venture-funded startups, Better Place's core problem stems from its inability to convince Israelis to sign up for its service.

As of the end of October, just 490 cars had been sold after several months of marketing--making its target of 4,000 customers by next June a stretch goal at very best.

Local press reports said that many Israeli drivers, doing the math, concluded that even the least expensive Better Place plan provided more miles than they were likely to use--and cost more than an equivalent gasoline car.

in September, the company launched a new, less costly plan that includes only 7,500 miles a year.

Other potential customers reportedly express skepticism and reluctance to be the first on the block to try the service.

2012 Renault Fluence ZE electric car, powered by Better Place in Israel [photo: Brian of London]

2012 Renault Fluence ZE electric car, powered by Better Place in Israel [photo: Brian of London]

Enlarge Photo

“I don’t want to be the sucker, the freier,” said airline employee Moshe Kretzo, 60, as quoted in Time magazine. The word also translates to "chump."

Packages of miles

The startup electric-car service vows to reinvent the way drivers pay for transportation.

It offers annual packages of miles for a set price--similar to mobile-phone plans--and includes both electric recharging and battery swapping as part of the package.

According to Haaretz, 38 of the planned 45 battery-swap stations have now been built in Israel.

Israeli drivers have to buy the Renault Fluence ZE electric sedan separately.

(Those drivers include our correspondent, Brian of London, who has covered his Better Place purchase and experiences here, here, here, here, here, and here.)

Electric car, minus battery

The Fluence ZE is the sole car built today that permits the battery pack to be swapped out at any of the Better Place network of swap stations.

Better Place continues to own the car's battery pack, which it leases to its customers.

The company agreed to buy 100,000 Fluence ZE models from Renault by 2016, but is now reportedly renegotiating that commitment.

The Fluence ZE is built only to order, in batches, and was apparently not included in a recent update of the rest of the Fluence range for 2013.

Despite its challenges in Israel, Better Place is continuing to roll out its service in Denmark and Australia. In both countries, it says the electricity it provides for recharging will be from entirely renewable sources.

Better Place Battery Swap Station

Better Place Battery Swap Station

Enlarge Photo

Losses near $500 milion

But Better Place overall has now lost $490 million on investments of $750 million since 2007.

Its cashflow problems have worsened recently as it increased spending to attract new customers and support existing ones during the third quarter of 2012.

When a recent effort to raise 200 million euros from institutional investors failed, it asked for $150 million more in funds from its current investors--but was granted only $100 million.

At least one analyst, IDC's Sam Jaffe, argues that the problem is not in either the service or the cost but in the Better Place distribution model in Israel.

In that country, he says, Better Place must either take on entrenched leasing companies head-on or split more profits with them in their current role as its distribution partners.

What do you think? Does Better Place have a viable offering? Will it survive?

Leave us your thoughts in the Comments below.

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Comments (14)
  1. As I have said before, electric cars are expensive and everything Better Place does makes it even more expensive.

    We can now add to that, electric cars are a tough sell, and Better Place makes them even more difficult to sell.
     
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  2. Correct. BP was a bad business model from the start. You can't reduce the actual cost of EV's by building expensive swap stations and stocking extra batteries.
    http://ephase.blogspot.com/2012/10/the-hits-keep-coming-for-better-place.html
     
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  3. Well, cellphones are routinely sold at huge discounts, provided that the purchaser signs on a service plan.

    This does of course nothing to lower the overall price of those devices (quite the opposite actually), yet it works great at getting people to buy gizmos which they would have instantly rejected as too expensive otherwise.

    BetterPlace's model is similar. But like a young cellphone carrier with little coverage and questionable viability, they won't attract much customers until they expand their infrastructure and/or lower their prices, and "prove themselves"; for that they need time and tons of $$$ -- it's a bad chicken-and-egg problem.

    BP trying this in multiple countries simultaneously is somewhere between audacious and suicidal.
     
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  4. BP does have a great idea but like any major change, it will take time for the public to get onboard with it. the Government should be helping them because it does greatly benefit its citizens.

    problem is its an idea who has yet to have a problem. offering one EV is the biggest mistake. they are simply too early. its like creating an egg holder before the concept of chickens is even dreamed of.

    i see them struggling at least another 3-5 years and only if EVs really start to take off. right now, there is less than a handful of EVs that would fare well with the swap options and that has to change fist
     
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  5. Personally, I've always been unconvinced by their business model.

    The problem stems from the fact that batteries are in their infancy. Price per kWh is falling, and energy density is rising. Durability and charge rates are also rising.

    It won't take very long (10 years? Less?) before the batteries are no longer an adoption blocker. A large, new-infrastructure play like Better Place needs a much longer runway than that.

    And that's not even their biggest issue, to my mind. To be blunt, they have to be much cheaper than the alternative to offset the risk of trying something new. You can't build a business (unfortunately) around simply offering a greener product at the same price, it has to be cheaper and/or superior in important ways.
     
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  6. Are these the same batteries that would be available in 10 years fifty years ago?
    About on par with fusion power. I was at Oak Ridge in 1973 and was told that in 10 years the first sustainable fusion reactor would be built within 10 years and the first commercial unit by the year 2000. Last I heard was that the first sustainable fusion reactor is just 10 years away and the first commercial unit on line by 2050 at the latest.
     
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  7. The majority of the motoring public doesn't want to a: lease batteries, and b: be tied to a particular paid charging system. People want electric cars to be like gas cars, but free-er.
    I pictured this lack of success for better place many years ago. I should start a 900 psychic hotline.
     
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  8. BP's mandatory contracts do take away the freedom most people expect to gain by buying an electric car first place. And not to make any future predictions but I still don't see Better Place as a long term necessity, one big advancement in battery tech could render Better Place pointless. When charge times are reduced to about the same amount of time as a battery swap why bother building huge swapping stations and who needs contracts when some chargers are still free to use? Better Place could survive as charging service, but I doubt the swapping service will last.
     
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  9. Better place wants to solve a problem that is slowly sorting itself out -price, range and recharge time of batteries- the wrong way. As a result parts of the concept (battery switching) and the execution (car with big quickdrop system where the luggage space should be) are unappealing and soon obsolete.

    My suggestion would be: out with the cumbersome Fluence, in with the practical Zoe with on-board 20 minute fastcharger. Offer people a very dense network (every 10 miles)of power outlets and you have a concept that's cheaper to implement, more appealing to drivers and better prepared for a future with much improved battery tech and increasing need for a fastcharge infrastructure.
     
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  10. Admire BP for offering an electric car vision but not their business sense.

    Who wants the inconvenience of being tied to a power network
    at the SAME PRICE as a free roaming gas car.

    Suggest BP make a deal with Litmotors.com to offer
    the public a really cheap electric option.

    The Litmotors.com cycle is enclosed, stable, goes 120 mph, and gets 200 miles per charge.

    Offer one version that only uses fast recharge stations, and another adapted to robot battery exchange.

    Both companies would gain and we get clean inexpensive
    transportation.

    ct
     
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  11. BP could survive but they need to make their contracts much cheaper to encourage their first adopter users. EV owners are hard to shut up...you need a certain amount of these first adopters to rave about the product and do a lot of your marketing for you as they explain the benefits to friends/family.
    Israelis should be much more supportive of BP...the enemies that surround them and wish to wipe them off the map derive much of their financing from the sale of oil.
    EV's offer a peaceful way to disarming radical oil bearing nations. Nearly 70% of world's oil use is for making petroleum for the transport industry. For this reason alone we should move to EV's as soon as possible.
    EV's represent our best realistic hope in reducing oil use.
     
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  12. you would think they could make using gas for transportation as a fundamental issue of terrorism
     
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  13. The one thing missing from electric battery cars, is the much lower operating and repair costs. No need to change the oil, coolant, trans flushes. The possibility of easily reaching 1,000,000 is a plus of the electric.
     
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  14. Having driven close to 30K kilometers I can say the car and the service lives up to both its advantages as to its limitations
    The range imitation is there. it is being overcome by the switch stations, at the expense of pre-planning and travel time. The service is second to none. The car delivers in comfort and performance. It delivers in costs: I can prove a cost of 12 sheqel per 100 KM, translating as 5 dollars per 100 miles, as a business vehicle. In this country that is rock-rock bottom for travel expenses.
     
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