Power struggle

Drivers lead an electrifying battle to recharge Better Place

Inspired by the pioneering vision and loving their cars, a group of owners coalesce around perennial entrepreneur Yosef Abramowitz to try to salvage the bankrupt firm

Jessica Steinberg covers the Sabra scene from south to north and back to the center.

Better Place offices near the Glilot Interchange in central Israel were closed on May 26, 2013 (photo credit: Yossi Zeliger/Flash 90)
Better Place offices near the Glilot Interchange in central Israel were closed on May 26, 2013 (photo credit: Yossi Zeliger/Flash 90)

Yosef Abramowitz is in a perennial rush. Slightly sloppy, his button-down, short-sleeved shirt hastily tucked in, a wrist full of bright rubber bracelets declaring his support for various political and social affiliations, the self-proclaimed Captain Sunshine is quite clearly anything but the groomed oligarch.

But now this American-turned-Israeli, who was first an activist, then a journalist, and most recently a solar energy entrepreneur, is embarking on another Sabra startup, this time aiming to revive the beleaguered — as in bankrupt — electric vehicle company, Better Place.

His non-tycoon characteristics aside, this latest adventure is actually a typical Abramowitz move, based on his own troika of personal beliefs, comprising tikkun olam (the Jewish notion of fixing the world), Zionist zeal, and the capacity of the kibbutz cooperative system to do good in the state of Israel. For this new venture, which has Abramowitz deeply engaged in a highly improbable effort by Better Place car owners to drive in and turn around the company, involves a particularly Sabra concept: creating a  kind of electric car co-op.

Just to review, the company started by Shai Agassi, who raised more than $800 million for his revolutionary concept of rechargeable electric car batteries, went belly up back in May, after Agassi was fired in the fall and citing losses totaling almost a billion dollars. Since then, court-appointed liquidators have been processing various proposals for the firm, with a decision expected as early as Wednesday; Abramowitz and his team of Better Place car-owners hope they’ll be given the chance to make the company work, their way.

Captain Sunshine Yosef Abramowitz at the first gathering of Israel's electric vehicle union (Courtesy The Union for Advancing Electric Transportation in Israel)
‘Captain Sunshine’ Yosef Abramowitz at the first gathering of Israel’s electric vehicle union (Courtesy The Union for Advancing Electric Transportation in Israel)

It may seem like a stretch, but it’s actually similar to what Abramowitz did in forming Arava Power when he moved to Kibbutz Ketura in the Arava desert from Boston some seven years ago. As he likes to tell, he walked out of the family’s kibbutz home one morning, felt the strong sun beating into his arm and thought, ‘They’ve gotta be doing a lot with all this sun power.”

From there, it was a relatively short, albeit heavily bureaucratic road to the establishment of Arava Power, which built the country’s first solar-power field at Ketura, and will be building its second just across the road in a few months. Abramowitz and his partners also started Energiya Global Capital, with funding from the US government and private companies, aiming to build solar fields in Rwanda, Haiti, Romania and another handful of countries. While in Rwanda, Abramowitz, who has five children, two of whom were adopted from Ethiopia, is also partnering with a youth village where orphans of the Rwandan genocide will be raised and educated, and where a solar field is being constructed.

For Abramowitz, the perennial activist, all of these efforts, whether to save energy or children or Russian Jews back in the day, are about acting for the benefit of the world, using Israel’s wealth of knowledge, its acknowledged smarts, to do “some good things for the State of Israel.”

“I’m coming from a kibbutz in the Arava, a Zionist green kibbutz trying to do some good things for the State of Israel, and that helped us overcome the cynicism,” he said. “You need goodwill; that, and a good team. When you’re the little guys, it all depends on a sense of partnership and goodwill. It’s fine to make some money, but I’m not trying to be a tycoon.”

What it takes to get to a better place

It was a short while after Better Place had declared bankruptcy when Abramowitz was on an airplane — one of the frequent transatlantic flights he makes nowadays, as he aims to grow Energiya Global into a global provider of solar energy — sleepless on the 15-hour flight back from the West Coast. Familiar with Better Place from the start, when he’d attempted to convince founder Shai Agassi to use solar energy to power up the changeable batteries, Abramowitz was contemplating the company’s future, counting up the Facebook ‘likes’ he’d received for a much-read op-ed he’d written on the subject for a local Jerusalem paper.

He’d called the piece “Bitter Place,” recalled Abramowitz, writing that the company could be scooped up for pennies on the dollar and run like a start-up.

His brain started churning, and he quickly drafted a letter to the government-appointed liquidators, and began working on a model for saving Better Place.

When the company had declared bankruptcy at the end of May, it was appointed a receiver — a liquidator who was supposed to look at company assets and try to find a buyer in order to satisfy the company’s $40 million in debt and obligations to investors. The company has only $9.5 million in assets and has lost over $800 million since it was established — $454 million of that last year alone. Part of the problem stemmed from Agassi’s original plan to build battery switching stations — there are 38 in Israel, the largest network in the world so far — which drove overhead costs up, as each one cost some $500,000 to construct.

A Better Place charging station, one of 38 throughout the country (Courtesy Wiki Commons)
A Better Place charging station, one of 38 throughout the country (Courtesy Wiki Commons)

Even when the stations were built, customers remained unconvinced. The company had only attracted some 1,000 drivers throughout all of Israel.

But there were other issues with Better Place, mentioned Abramowitz, stemming from the electric car’s company short, but checkered history. With numerous unresolved governmental issues regarding the benefits of the electric car company, and with tycoon Idan Ofer as chairman, “no one in the government wanted to cut the richest man in Israel any breaks,” said Abramowitz of Ofer. “The only way for this to work is to get Idan Ofer out, and no one in the government had wanted to give any benefits to Shai Agassi when it felt like he was building a monopoly.”

When the electric car company was first established, it had listed about ten “achievable” political goals, and it achieved “about half of one,” said Abramowitz.

“You can’t do a successful infrastructure project without government cooperation,” he added. “When we started Arava Power, it was exciting, but we understood from day one that there was a whole list of regulatory things we needed to do.”

Yossi Abramowitz (in peach shirt) and his partners at the country's first solar field (Courtesy Yosef Abramowitz)
Yossi Abramowitz (in peach shirt) and his partners at the country’s first solar field (Courtesy Yosef Abramowitz)

Arava Power, emphasized Abramowitz, has had its own share of war stories, and the company still needs more funding. But the basic goodwill that was shown to it, as well as a sense of partnership — one of his partners is a Ketura kibbutz member, the other is a fellow alumnus of Young Judea, along with Abramowitz — made all the difference. “It’s fine to make some money, but I’m not trying to be a tycoon.”

For Better Place, what’s needed is a way to cut through the red tape, said Abramowitz, and this may require one of the early Israeli concepts, the cooperative.

Two months before Better Place went under, a group of its dedicated drivers — those who had shelled out NIS 160,000 ($44,000) for their electric Renault Fluence, a boat of a car that looks like your grandfather’s Cadillac but drives with a quiet electric purr — decided they needed an interest group, a lobby for electric vehicles in Israel.

“They had the authenticity and moral authority to speak,” pointed out Abramowitz. “Then boom, the company completely failed and they’re in trouble because they shelled out all this money for the car and for 70% of them, it’s the only car in the family. They were, like, the cooperative should take this thing over… That sounds like a kibbutz to me.”

Yosef Abramowitz and Efi Shahak, at the union's first gathering (Courtesy Yosef Abramowitz)
Yosef Abramowitz and Efi Shahak, at the union’s first gathering (Courtesy Yosef Abramowitz)

One of the organizers of the Better Place interest group, the igud or union, as its owners call it, is Efi Shahak, a high-tech guy with a consultancy of his own, and a Better Place car that he bought two years ago. If there was ever an early adapter of EVs in Israel, it’s Shahak.

“When we started the union, we didn’t know where it would go,” said Shahak. “We’re all people with the same idea: We love the car and we want it to continue. When there’s a bankruptcy, there’s usually customers who are dissatisfied. We’re not.”

As Abramowitz likes to comment, he’s never seen a more committed consumer group in his life.

“To me, it was like the Soviet Jewry movement, when we were the voice of the refuseniks and as long as they were going to show courage, we had every obligation to support them,” he said. “That’s my genetic makeup. Here’s 900 people, none of them wanting to return the car, none of them looking to return to gas guzzlers; they’re just crazy about the cars. To me, that was familiar. So I said to Efi, as long as you’re in, I’m going to support you.”

Prior to Better Place’s bankruptcy, there wasn’t that much reason for the drivers to be organized, commented Better Place car owner Saul Singer, the co-author of “Start-Up Nation,” which chronicles the story of Better Place in its very first chapter. “But the fact that the drivers were organized turned out to be really important.”

“It’s hard to explain to people,” said Singer. “There are a lot of people who think, wow, maybe it didn’t succeed because it’s the wrong kind of car; they don’t like Renault. And what they don’t understand is that once you start driving one of these cars, you don’t want to go back to a gas car. It’s not between Renault and any other car, it’s the difference between electric and gas.”

It’s a gas

Before the announcement that Better Place had gone bankrupt, Shahak and his fellow BP drivers began meeting with local and national government officials, aiming to resolve that long list of political goals, including securing tax benefits and parking preference to owners of electric vehicles. “People were slowly listening to us,” said Shahak.

Slowly, that is, but surely. The municipalities of Petah Tikva, Herzliya and Ra’anana had already offered free parking to electric vehicle owners, and the owners were about to tackle some of the other sticky regulations when the company fell apart.

Better Place founder Shai Agassi seen speaking at the recent Peres Presidential Conference, where he spoke about solar power and electric vehicles (photo credit: Miriam Alster/Flash 90)
Better Place founder Shai Agassi seen speaking at the recent Peres Presidential Conference, where he spoke about solar power and electric vehicles (photo credit: Miriam Alster/Flash 90)

The Better Place union then held its first “conference,” said Shahak, gathering themselves and their car in a parking lot. Within hours they had a public relations firm, a logistics team and their own crew of lawyers, all offered for free, said Shahak.

And then Shahak and another Better Place car owner — who happened to be a Kibbutz Ketura person — met up with Abramowitz after his memorable plane ride, along with “Start-Up Nation” writer Singer.

The owners, said Shahak, could have continued in their efforts before Abramowitz joined the fight. But Abramowitz’s energy — and his extensive network of government connections — may have helped them turn the tide.

“He really cares,” said Shahak, “It’s not just for him; he loved the idea of the union and the cooperative. He really helped make it a reality.”

Working around the clock for several weeks, Abramowitz and the Better Place owners made three requests of the government: to offer an indefinite extension on the 8% purchase tax on electric vehicles that was supposed to run out at the end of 2013; to look at the cost savings if the government, army and private individuals were to adapt electric vehicles; and to look into the possibility of opening the tender process to all electric vehicles to operate within Israel’s battery charging networks.

“Whether or not we win, I believe the government will come forward on all three,” said Abramowitz. “And if that’s the extent of my involvement, then ‘dayenu,’ my work is done.”

Waiting for an answer

For the moment, Abramowitz, Shahak and the rest of the union members believe there’s a good chance this team will actually win the approval of the liquidator and gain ownership of Better Place. After all, theirs is a competitive offer to keep the network alive, as opposed to the other offers for buying the Better Place assets and liquidating them, piece by piece, or car by car.

“We ended up with the best minds,” said Abramowitz. “It’s just amazing, it feels like a social movement, and that’s my comfort zone. It needed someone who knows how to work with the government on electricity, and that felt like a divine hand.”

Overall, the plan is to have Better Place declared a national infrastructure project under the Better Place owners’ leadership, becoming a national technology and service platform for all electric vehicles in the country.

“That’s what it should have been from the beginning,” said Abramowitz. “If we had to start all over and needed $200 million to put all those changing stations into the ground, there’s no way it would have happened. But it’s all there, and all you need is 4,000 electric vehicles on the roads in Israel in order to break even.”

The union will have to raise $5 million very quickly, in order to keep the current company management in place to run the business, but on the cheap, said Abramowitz, like a start-up. He thinks the group has a 60% chance of winning, but less than a 50% chance of then succeeding because of its vulnerability in the first six months.

Alan Gelman, the recently hired chief financial officer of Better Place, seen at an Economic Affairs committee meeting in the Knesset (photo credit: Miriam Alster/Flash 90)
Alan Gelman, the recently hired chief financial officer of Better Place, seen at an Economic Affairs committee meeting in the Knesset (photo credit: Miriam Alster/Flash 90)

“It’s a squeaker,” he said. “But if we don’t succeed, no one will fault us.”

As for Shahak, he’s working overtime, between running his own business and putting the Better Place plan into effect.

“We love the car and want it to continue and that’s what this is about,” he said. “It’s not about the money.”

“We see in this a national infrastructure worth hundreds of millions, and which is one of the most advanced in the world,” said Shahak. “It’s an unbelievable number of working stations. This is [on the cutting edge of] the current technology of electric vehicles, and Israel is the only place that has it: 37 stations, 2,000 curbside [charging] stands and 1,000 cars. It doesn’t make sense to throw it out.”

Charging a Better Place car (photo credit: Roni Schutzer/Flash 90)
Charging a Better Place car (photo credit: Roni Schutzer/Flash 90)

The cooperative will eventually require partnerships to expand the technology and allow it to function, added Shahak, otherwise it won’t succeed. It will also need to sell several thousand more cars, but if this Better Place cooperative doesn’t succeed, electric vehicles are bound to arrive in any case, and new charging stations will end up being built, again.

“Success is definitely different for this new reincarnation,” said Singer. “For Better Place, the goal was for Israel to just be the beginning of Better Place cars. Right now, the ambition for this new effort isn’t that; it’s much more modest. It’s essentially just to run the system in a way that breaks even, runs it in a sustainable way for a modest number of cars in Israel and maybe makes a small profit, and takes the infrastructure and all the investments and keeps it working, more like a salvage operation.”

But what’s clear to all is that it would be a shame to throw all the considerable investments away, necessitating pulling the cars off the streets — turning, as Abramowitz joked rather sadly, the switching stations into car washes.

“We’re a small country and electric transportation could work, because the distances are so short,” said Abramowitz. “That’s part of why I feel so passionate about trying. And we get an A+ for effort.

“Now, it’s an uphill battle. But if it succeeds, it’s a different story.” A Better story.

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