End of the road for Better Place

Battery-swap technology in doubt as Israel's high-profile EV battery specialist files for bankruptcy

Battery supply specialist Better Place has filed for bankruptcy in its home state of Israel – less than a month after Fisker, another high-profile hopeful of the EV industry.

The move comes after the company’s chief source of rescue funds, investment giant Israel Corp, announced it won’t be pouring any more money into what it sees as a lost cause. Unable to find cash after a tumultuous final year, Better Place has filed a motion for dissolution and called in the liquidators.

In a statement announcing the end, CEO Dan Cohen inferred the company’s problems stemmed from the scale of its ambitions. Better Place’s success was always contingent on its managing to persuade car makers to design their electric product around its sophisticated battery-swap model, which allows drivers to stop in and swap batteries at fully automated swap stations.

“Unfortunately, after a year’s commercial operation, it was clear to us that despite many satisfied customers, the wider public take up would not be sufficient and that the support from the car producers was not forthcoming,” said Mr Cohen, the third occupant of the job in less than a year. “Against that background, the most recent fundraising round was not successful.”

Between 2007, when it was founded in Israel by entrepreneur Shai Agassai, and 2011, the company chewed through more than $US750 million in its efforts to set up in posts across the world, including in Australia.

In its first five years, Better Place recorded more than $US490 million in losses. In the latter half of 2012, it claimed it was moving closer to break-even despite losses of $132 million in the financial year just gone. By Q3 2012, even though the company was moving closer to break-even, top-up money was running short and proving harder to come by.

With venture capital opportunities falling away, the company still showed enough promise to secure a further €40 million from the European Investment Bank. But internal ructions were rising, culminating in Agassi’s replacement as CEO in October by Australian chief Evan Thornley. The change in leadership, it was announced, marked a shift in priority from Agassi’s innovation strengths to Thornley’s business operation skills.

In Q4 it lost a further $64 million. By the end of January 2013, amid what sources were calling “strategic differences” and Thornley was calling “strong and honestly-held differences… at the most senior levels of the company about how we best take the company forward”, he was out, replaced by former deputy Dan Cohen.

The company quickly embarked on a rationalisation program, reining in the spend in slow markets like Australia to concentrate on its two major success centres, Israel and Denmark.

The prospect of liquidation potentially creates serious problems for administrators, and for consumers and fleet operators who saw enough promise to buy into Better Place’s battery swap model. Under the company’s terms of business, customers own their vehicle but Better Place owns the battery.

Asked by Israeli business paper Globes about how such issues might be resolved, Mr Cohen said that’s down to administrators. “We're doing everything to serve the customers and operate the recharging network, until the liquidator makes a different decision. The customers and employees are the top of our concerns.”

“[But] ownership of the car is different for each customer, and it's true that the customer doesn’t own the battery. This is the first thing that the liquidator will have to examine, and it's hard to give an answer now.”

Globes reports that industry insiders believe the best chance lies in possible intervention by Renault, the only carmaker to build its product – the Fluence ZE EV (pictured) – around Better Place’s battery swap system.

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End of the road for Better Place

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