A Better Place, the Israeli electric car company, filed for bankruptcy after burning through over $800 million.
Painful Bankruptcy For Better Place: Dec 31 Cash $34M, Assets $149M. Liabilities $915M. Fin's http://t.co/4jtyp06jX7… pic.twitter.com/JxMXnAkfOX
— PrivCo (@PrivCo) May 27, 2013
Unlike other electrical vehicle makers, A Better Place was based on a concept of battery swapping instead of charging stations.
The first obvious sign of trouble was when CEO Shai Agassi was forced out late last year.
Dan Primack writes at Fortune:
“The company was not well-served by having things it thought would happen over a decade happen within a year,” says a close familiar with the situation. “Ultimately the idea was always based around scale, and it just didn’t build it fast enough or well enough.”
I also reached out to my Fortune colleague Brian Dumaine, who has covered Better Place in the past. He believes that the company underestimated the time and expense of everything from purchasing land to dealing with permitting to tearing up the streets for charger installations. He adds that another other major issue was that most electric car-makers — such as Tesla Motors (TSLA) — saw no reason to either make or install swappable batteries, since the battery and control system are considered each EV maker’s special sauce. The only exception was Nissan’s Renault unit, which produced a Better Place-compatible vehicle.
No word yet on what Better Place plans to do with its assets. A company spokeswoman has not responded to a request for comment.
With the departure of A Better Place as a partner,Renault, according to the Wall Street Journal, has now turned to the French conglomerate Bouygues, to address infrastructure issues for its electric vehicles.
Brian of London, an enthusiastic A Better Place customer, has no regrets:
They didn’t run this thing into the ground at full speed and, who knows, maybe there is a $500m+ asset waiting to be bought for pennies on the dollar and to turn into one of the world’s great successes. It’s happened before. There are aspects of Better Place’s service (besides the battery switching) that nobody in the electric car world has but are hugely valuable.
A final word for those people who brought me in to Better Place and led me to ownership: I have absolutely no regrets. I’m hooked on driving an electric car and will do all I can to continue owning and using one. I am forever grateful to you all for opening my eyes to electric driving and nothing would make me change this last year and half. Thank you!
Back in 2008, Thomas Friedman predicted that the wind farms of T. Boone Pickens and the cars of A Better Place would lead “an energy revolution.” Pickens withdrew the last of his investments from wind farms last year. Yesterday A Better Place filed for bankruptcy.
Friedman, whose predictions for the revolutionary Arab Spring have proven false, shows himself no better in predicting energy revolutions.
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Comments
I always wondered how A Better Place was going to succeed in such an nascent market. It’s one thing to install small, sparsely scattered charging stations away from EV owner’s homes. Perhaps the non-home charging frequency for many early adopters wouldn’t be so high (once a week? once a month?). But to build out much larger battery swapping facilities that are the ONLY choice (cannot swap at home) seemed very expensive, difficult (land, permits, etc.), and premature. Perhaps as a later stage in the EV life cycle such a plan has a better chance (more customers).
I’ll relate my Better Place experience here, while correcting a misconception in your comment that is also present in the post itself. I was a potential Better Place customer at one point about a year ago (right before Agassi was given the heave-ho). The Better Place model is based not solely on battery swapping, but on a combination of battery swapping and charging stations. BP was going to install a charging station in my parking space at home and one where I park at work. Many public parking facilities were also equipped with a small number of charging stations. Since my home and work are only about 35 km (about 22 miles) apart (well within the travel range of a single charge), my need for battery swapping would only have been under special circumstances (long weekend trips, etc). Also, the swapping stations, though large compared to a charging station, were of comparable size to a gas station, and the process completely automated (akin to going through a car wash and taking about the same length of time).
I found it intriguing, and the test drive I took was phenomenal. There were other reasons that I ended up declining, most of them unconnected to the car itself. The only negative about the car was that the battery took up most of the trunk space, leaving perhaps enough room for a large grocery run but forget about putting more than one suitcase in there.
I frequently am involved with people who devoutly believe in “Tinker Bell technologies*.” I have mentioned A Better Place several times, ostentatiously looked at my watch, and waited. After 5 minutes, even if the discussion had shifted, I would politely interrupt and ask if there was ANYONE, SOMEONE who would roll their eyes in disbelief that someone would believe this business would fail. Surprised, and often offended looks only. I shall have to find another such program.
Treg
*A reference to the scene in Peter Pan where Tinker Bell is dieing, and Peter Pan turns to the audience and tell the kids that if they believe, really believe, Tinker Bell will be well.
“…business would fail…” >> “NOT fail” Need more coffee.
Motor fuels are going to be powering market-provided transport for the foreseeable future.
IF the witch-doctor religion of the Collective is kept at bay.
The electric car is a technology that can’t compete. It MAY one day, as storage issues are revolutionized via innovation.
But not today.
Even with the new tech that is being examined energy density and life cycle issues at best brings electricity to par (stress the words “at best”).
This includes graphene capacitor systems, lithium/(anything), and other recent inventions.
And this is with so much research into a better battery as to beggar the imagination. If the funds were placed into researching fuel additives, new fuel filtrations, fuel aeresol methods, fuel intake regulation, mixed load engines, better heat convection, and other things to benefit fuels we would probably already be seeing a 75% increase in mileage.
The most promising result battery wise is GE’s graphene capacitor system but there has been some shaking of the heads as the method they talk of creating it does relatively nothing (is it a cloak to keep it secret or is it a fraud for more Government funding?).
Personally I think the only way to bring batteries to par would be to use radioactives as a component (stores far more energy that way, only issue then is containment).
I agree.
But my radical thinking (i.e., “root”) leads me always to…
WHY?
We have motor fuels that we know, are abundant, work in our existing vehicle fleet, and have been safely used for a century and counting.
As Matt Ridley points out, fossil fuels are NOT competitive with anything in nature, unlike stupid fuels like ethanol.
EVs will be a growing niche. For example, urban transit – both individual and commercial – is well suited for EV as distances are not usually far and building the charging infrastructure is much more simple.
All of the advocates promoting that it will rapidly replace all fuel based transport are making a big mistake. It taints the picture and comes across as overzealous. Traveling from NYC to LA by EV is not in the cards, for example. That is why hybrids are still infinitely more popular than pure EV.
Barry’s NEW tax dollar trash idea. Especially with all those wind mills.
I have been interested in Hydrogen as both an energy source and an energy carrier for decades.
Apparently, politicians find it politically uninteresting.
Hydrogen has many roadblocks to effective usage.
1) It explodes if sparked with oxygen available (aka a crash)
2) It leaks from a container due to small atom size (while small it is a concern for long term parking)
3) It has lower energy density unless stored as a liquid
4) The liquid form requires some serious cooling and takes from the total energy
5) The liquid form also has a higher cost ratio
6) Liquid form has problems with longer term parking
7) Hydrogen requires electricity to create (the hidden cost).
Imho if we only use Hydrogen for spacecraft it would be a good thing.
I wonder if the large number of failures of “green” companies is in any way out-of-the-ordinary for a new technology. Don’t most new companies fail?
Are we noticing the failures ONLY because our government has decided to gamble with taxpayer money on an entire sector of our economy, rather than letting investors take the risks?
Or has our government, by intervening in the market, actually favored companies that would otherwise have failed earlier, and more cheaply?
Most small businesses start with less than a million in cash. most large businesses with millions to devote do not fail quickly but instead if they do die it is from a slow decline (like Radio Shack, AOL, Kodak, and more) where they will sell off assets, refinance, restructure, etc.
The vast majority of business closures is from ones with very little in assets. The larger they are… the longer it takes for them to fall.
The exception has been of course government subsidized industries. Those have currently got the highest failure rate of any subgroup at all including new eateries.
You know you’re in trouble when the value of a share of your company’s stock is worth less than the cash value of a coupon.
There is no real purpose to an electric car since it is not more reliable, practical or efficient than current hydrocarbon based technology. The electric fetishists have been proven wrong when you consider that the pollution is just shifted to the generating stations that power the electrical grid and that the pollution that occurs when the electric car components are manufactured exceed the amount that is generated in the production of hydrocarbon powered cars.
It sounds like they had an incomplete or inviable business plan. Why would anyone risk nearly 1 billion in capital and be liable for the same amount with what is ostensibly a flaky proposition?