Israeli electric car firm Better Place, which hoped to revolutionize driving habits in Israel and worldwide, will file for bankruptcy in the coming week.
The trailblazing firm sought to accelerate a world motoring shift away from gas-guzzling cars to electric, battery-powered vehicles. But “the company was not well-served by having things it thought would happen over a decade happen within a year,” a source familiar with the company’s financial woes told Fortune on Friday.
He was referring, among other things, to the rapid rise of oil prices before the company could get its feet on the ground and construct battery-swapping stations for its cars, which depend on swappable batteries, in order to market them on a larger scale. “Ultimately the idea was always based around scale, and [Better Place] just didn’t build it fast enough or well enough,” the source said.
The company’s decision to file for bankruptcy followed a long series of blows and setbacks to its business model, among them the dramatic departure of its founder and CEO, Shai Agassi.
Earlier this month, Better Place suffered a blow when Renault CEO Carlos Ghosn said in an interview that the company would dramatically slow its production of electric cars with swappable batteries — the kind of cars Better Place has built its business on.
Going forward, Ghosn said at the time, the company would continue producing vehicles with swappable batteries in the countries where they were currently marketed — Israel, Denmark, and Portugal — but only if there was demand.
Last October, entrepreneur Agassi, who started the company, stepped down as CEO and resigned from the company’s board, amid layoffs that cut the number of its employees in Israel and worldwide by more than half.
In April, the Israel Corporation, the largest investor in Better Place, reported that the company had lost $454 million in 2012 alone, with just $7 million in revenue in 2012 and an operating loss of $386 million. Better Place was also issued a “going concern” warning, meaning that its viability could not be guaranteed past the next year.
In the company’s five years of existence, it has lost nearly $800 million, and it burned through 90% of the cash it had at the beginning of 2012 — ending up with just $34 million, after starting the year with $293 million.
In its original overview, Better Place had hoped to be selling hundreds of thousands of cars a year in Israel by now, produced by Renault-Nissan, its manufacturing partner. It was betting that the electric-powered vehicles would prove attractive based on cheaper cost, comparable acceleration, similar speeds, and environmental advantages over conventional gas-guzzlers. It planned a nationwide network of plug-in “charging spots” and battery swap stations. It also touted partnerships developing in France and the US, harboring particular hopes of an electric car revolution pushed by the Obama administration.
So far, however, Better Place has sold barely 2,000 vehicles. According to its agreement with Renault, the company was supposed to sell 115,000 by the end of 2016 — and was subject to major fines and penalties if it did not.
Until relatively recently, though, Better Place was still expressing confidence in its future. Company spokesperson Susanne Tolstrup, for one, said that the company had a bright future in China. “Better Place, along with the world’s largest energy company, China State Grid, has been working on developing international battery switch standards. We are working both with State Grid and Southern China Grid on projects, including a large infrastructure project in Guangzhou, southern China, where the interest in electric vehicles and battery switch is great.
“Looking at international trends, there is growing interest in battery switch technology,” Tolstrup had said. “We continue to see battery switching as the technology that is the real alternative to petrol and diesel fuels for vehicles when it comes to the challenge of long-distance electric car driving.”
As Friday’s news showed, electric car manufacturers in Israel still have more significant challenges to cope with.