Have electric cars gone to a better place?

An owner of an Israeli electric car tries to provide more satisfying answers about the future of the bankrupt company than ‘I have no idea.’

As owners of a Renault electric vehicle, we have been deluged with questions since Better Place — the company that runs the electric car network in Israel — announced its bankruptcy at the end of last month. Since many of the questions tend to be the same, I put together a brief Q&A on those most frequently asked.

1. What’s going to happen to Better Place?

I usually answer this with “I have no idea,” which is not terribly satisfying but it’s the truth. According to the receiver/liquidator, there are some 25 interested parties with pending offers to buy all or parts of Better Place. The “all” offers – including one from solar entrepreneur Yossi Abramowitz and a cooperative of Better Place customers – would keep the company going for another couple of years, at which point it would either die for real or become one of the greatest turnaround stories in Israeli history. The “part” offers would have different components going to different players and sink any possibility that current car owners could continue to drive the way we’ve done up until now.

2. Are you optimistic?

That an “all” offer will win the day and that Better Place can get even better? I try to be. It makes sense for the car owners, who have “invested” more than $30 million (that went mostly to Renault, but it can be argued that we were investing in the Better Place concept) as well as for Israel, which would become an electrifying example of how a country can get behind an energy future not dependent on oil. Last week, Transportation Minister Israel Katz said at the International Transportation Conference: “We must ensure that Better Place customers are able to continue receiving services in all aspects – car charging, garage services, battery switches, etc.”

Better Place car

But the government-appointed receiver’s job is to get the most money for the creditors, and keeping Better Place alive doesn’t generate fast cash for the companies standing in line. It would probably take a direct intercession by someone sympathetic in the government to tip the direction in the owners’ favor. Beyond Katz’s encouraging statement, the Knesset has never shown a lot of interest in giving electric cars a helping hand. (Health Minister Yael German asked for an electric car as her government vehicle and was outright refused.)

3. Even if it all falls apart, they can’t turn off the electricity to your home charging spot – that comes from the electric company, right?

Yes and no. The electricity, of course, comes from the national grid, but Better Place installed its own device in our garage, which is what we plug into every night to charge up the car. That device is “worth” NIS 10,000 ($2,700) – at least, that’s the amount Better Place said it would charge if we ever needed to move it to a new location. If the device is turned off along with Better Place, it’s not clear if it would just “work.” There might need to be some jerry-rigging and guess who’ll probably have to foot that bill?

4. Won’t the government have to compensate you?

See #2 above – the government doesn’t necessarily have the will, let alone the means, to do that – I mean, who’s going to pay for that compensation? The already overburdened taxpayers? As it is, it’s surprising that there’s been such support for us poor owners (Israelis usually have little empathy for freiers, i.e., suckers who bought into an untried concept and now have to make our own bed).

5. So, what went wrong?

Many analysts have already spilled copious ink on this, but hindsight is notoriously 20/20. The usual response – that Better Place massively overspent and set its sights too high with operations all over Europe, China, Australia and the US when it should have focused on one small test case, Israel, and kept the burn rate low – sounds great now, but imagine Better Place founder Shai Agassi trying to raise money on his new venture and saying “Yes, I need half a billion dollars for a limited demo in a single location in a beleaguered neighborhood.” He might not have raised enough to build out the system in the first place.

On the other hand, bad management seems clear, if we’re to believe the reports that, for example, Better Place paid for customer relationship management (CRM) software supporting a million customers up front when it really should have scaled slowly (there are, after all, only about 1,000 cars on the road).

6. Do you still believe in Better Place’s technology?

This is a tough one. An Israeli analyst once wrote that Better Place’s concept of battery-swap stations is a kind of like a Band-Aid; a network of sophisticated garages more akin to fixing flat tires than a long-term solution. I’d tend to agree. What we all want is batteries with very long ranges that can be charged in five minutes by plugging in, whether at a mall parking lot or a “station” along the side of the road.

But those batteries don’t exist yet. Even the great and mighty Tesla takes 45 minutes to an hour to fully recharge a battery. The company’s “dramatic” announcement last week that Tesla, too, will be offering battery swap as an option just confirms the situation we’re currently in: that battery swap is the only way to give 100 percent electric cars an acceptable range. How long will that go on? Even Renault, which makes the only model Better Place sells, favors “fast charging” over battery replacement. When Renault-Nissan CEO Carlos Ghosn spoke these words out loud, it caused a shock that may have contributed to Better Place’s ultimate downfall several weeks later.

7. What’s the worst-case scenario?

Most people would say that, worst case, the car won’t run at all; that it will be impossible to charge it up overnight or that the creditors would go so far as to repossess the battery (which we don’t actually “own”) leaving us with a $30,000 paperweight. That’s not likely – the battery without the car has no value, other than perhaps being melted down, an environmental disaster that would make the story even more tragic.

The worst-case scenario for me would be that we get to keep our cars but the swap stations are closed. Then I have a very expensive and very large “city car,” one that I can never take farther than the suburbs around Jerusalem, where I live. That’s not why I bought the car; I’d have to go out and buy another car as my long-distance vehicle.

8. Do you regret buying the car?

Sure, had I known that Better Place was going to go out of business, no matter how much I believed in the vision, it wouldn’t have made sense to invest a sizable chunk of our savings. But for Better Place to have even had a chance at success, someone had to take the risk. And anyone who has driven the car will tell you it’s the best ride they’ve ever had — smooth, powerful, sophisticated, quiet. I wanted (and still want) Better Place to make it, and not just for personal reasons. When I’m not thinking about my pocketbook, I’m glad to have contributed and to have become part of the adventure. And it’s not over yet. Ask me again in another month.

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About Brian Blum

Brian has been a journalist and high-tech entrepreneur for over 20 years. He combines this expertise for ISRAEL21c and Israelity as he writes about hot new local startups, pharmaceutical advances, scientific discoveries, culture, the arts and daily life in Israel. He loves hiking the country with his family (and blogging about it). Originally from California, he lives in Jerusalem with his wife and three children.
  • Jacob_Denver_USA

    Best of luck, Mr. Blum, I hope it works out for you.