The idea was simple enough.
As simple as revolutionising an entire industry can be, anyhow. Putting electric vehicles on people’s radars for good and fixing one of its biggest drawbacks, range anxiety (distance travelled per charge)
How, you ask? By rethinking the whole charging procedure and dramatically reducing the charging time.
A good idea, you ask? According to investors, yes. Better Place raised almost $1 billion in funding without a ready product.
Who, you ask? A serial entrepreneur named Shai Agassi, a guy charismatic as few others, was able to convince investors he would sell millions of electric cars in Israel and the rest of the world.
Instead of relying on the traditional stop-and-wait-while-your-battery/tank-is-refilled, which for an electric car takes a long time, Agassi wanted to think new. His solution was to exchange the whole battery package under the car, fully automatic, and replace it with a fully charged one. This meant that you would be able to be in and out of a charging station, leaving with a full battery in less than 5 minutes, not much longer than the time taken to refill a regular petrol tank. This, combined with a vast network of battery swapping stations throughout cities and the countryside, would mean the end of range anxiety.
Better Place was founded in 2007 and immediately drew investors’ attention. They wanted to build affordable electric family cars in a market consisting almost solely of Tesla Roadsters. After hitting it off with current CEO of Nissan and Renault, Agassi suggested at a TED talk in 2009 that Renault cars would enter the market with “mass volume – mass volume being the first year, 100,000 cars”. This would mean half the new-car market in Israel at the time, and he later told Time magazine that they would eliminate new sales of petrol cars by 2015.
The final order to Nissan-Renault, placed in 2009, committed Better Place to buy 100,000 cars between 2011 and 2016. Their planned business model would borrow from the telecom industry in that they would subsidise the vehicles and make use of monthly subscriptions for the charging networks. Eternal optimism dominated in these early days and Agassi soon told reporters that the cars would price about half of a petrol car, this without having agreed on prices with Renault-Nissan.
The huge investments meant Agassi was soon on the lookout for expansion beyond the Israeli borders. Better Place focused huge amounts of time and money on lobbying politicians and planning for new markets, first out would be Denmark and Australia. In addition, instead of hiring experienced people from the motor industry, his managing group consisted of both his brother, sister and father, and later also his girlfriend and her friends.
His attempts to get other car manufacturers on board did not go well, scaring away German manufacturers with his ideological and top-down point of view. In fact, while meeting with General Motors, Agassi suggested to them that they would deliver their cars for free, and laughed at their plans for the new Chevrolet Volt. As you can imagine, the meeting did not end on good terms.
When the first cars were finally ready for delivery in 2012, reality hit hard. The driving range was substantially lower than promised and priced at the same level as petrol cars. The monthly subscription added $3,000 a year plus charging, and the battery station infrastructure ended up costing $2m. At that time, they were losing $500,000 each day. In May 2013, Better Place declared bankruptcy having sold just 1,500 cars.
Better Place had a big opportunity to push the electric car revolution, with huge funding and massive public interest. In the end it was probably mismanagement that ruined the big adventure. But was it ever a good idea?
The short answer is yes.
Let us first look at the investors and the media. Both gave of their resources in vast amounts, underlining that the idea must have had some things going for it. Also, Better Place did manage to build a working vehicle and charging stations, albeit not exactly with the specification and price they had promised. In other words, the technology was possible.
Another convincing argument is that Tesla supports the technology. This video from Tesla depicts the Model S switching battery in only 90 seconds, substantially faster than Better Place allowed.
On stage, Elon Musk proclaims: “The only decision you’ll make when you come to our Tesla Stations is; do you prefer faster or free?”, suggesting that swapping stations might not be too far away.
So far, noone has picked up the baton from Better Place. Probably the number of electric cars is still too few to justify spending hundreds of thousands of dollars on switching equipment. The vast number of different batteries and standards of charging must also seem cooling for the industry, allowing one type of car per different station.
Instead, industry focus is now on improving battery and supercharging technologies. But with growing number of vehicles, and Tesla pushing innovation, that might change in the not all too distant future.
What do you think?
How can we learn from failures?
Join us in Trondheim, Norway, on 18 & 19 March as we seek to awaken the entrepreneurial mindset at Technoport 2015.
Photo credit: U.S. Embassy Tel Aviv