New troubles chase old at Better Place

From major financial losses to an almost-impossible sales commitment, add to the electric car company’s woes the possibility that it will no longer have vehicles to sell

A man refuels a Better Place car marketed by Renault at the company's demonstration center in Ramat Hasharon (photo credit: Roni Schutzer/Flash90)
A man refuels a Better Place car marketed by Renault at the company's demonstration center in Ramat Hasharon (photo credit: Roni Schutzer/Flash90)

Israeli electric car startup Better Place suffered yet another blow to its business model last week, after 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, 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. New markets for Renault electric vehicles will be provided with batteries that use trickle-charging, in which drivers plug a wire connected to the battery into an electrical outlet for recharging.

Renault’s announcement could be a major blow for Better Place. The Renault Fluence ZE model was the only one on the market that could make use of Better Place’s network of charging stations. Without a large enough demand, Renault may stop producing the swappable battery model altogether, or charge a large premium for the model, analysts wrote on the Danish web site EnergiWatch, which posted Ghosn’s statements.

“There may be cases where people prefer replaceable batteries, such as in Israel and Denmark,” Ghosn said. “We will continue to offer the Fluence with replaceable batteries in those markets. There may also be large companies, where they have a huge fleet of cars, and prefer battery swapping because they do not want to wait for charging as they would with trickle charging. But it will not be the majority of the market, and going forward, our focus is on trickle charging technology, such as that in our new Nissan Leaf,” he said, referring to the Japanese produced and Renault-owned compact car.

The announcement by Ghosn is another in a series of major recent setbacks for Better Place. Last October, entrepreneur Shai 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 just $34 million, after starting the year with $293 million.

More troubles are on the way. So far, Better Place has sold barely 2,000 vehicles. According to its agreement with Renault, the company is supposed to sell 115,000 by the end of 2016 – and is subject to major fines and penalties if it does not. With Renault’s decision to stop pushing the swappable battery model of the Fluence in new markets, it’s unclear where market growth will come from, the Danish site said. It’s unlikely that Better Place will be able to close enough fleet deals, like the one it recently made with Israel Aircraft Industries, to make up for the shortfall, the analysts added.

Better Place expressed confidence in its future, though. Company spokesperson Susanne Tolstrup said that the company has 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,” said Tolstrup. “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.”

read more:
Never miss breaking news on Israel
Get notifications to stay updated
You're subscribed