With the bankruptcy of Better Place, what becomes of the customers and employees left behind?
While bankruptcy court deals with the investments of the individuals and firms that put money into the company, customers on Monday — the day after Better Place declared bankruptcy — were worried about their personal investments in the project: the vehicles that they leased or purchased, and the loans they took out to pay for them.
And what about the national vision Better Place inspired — of an Israel with far less dependence on foreign oil, its people traveling about in clean, quiet Renault Fluences that ensured the country’s energy independence, and guaranteed a better environment?
The “day after” questions of the fate of Better Place customers — as well as the notion of energy independence — are now being hotly debated among customers, and among environmental activists and state policymakers; soon, they will likely be debated in court, as creditors seek to settle for whatever they can on the huge $850 million investment Better Place consumed during its barely five years of existence.
Most policymakers believe that electric cars will make it to Israel one way or another, although it may not be Better Place that brings this about; electric cars, in one form or another, have become a permanent part of the automotive landscape around the world.
The outlook for owners and lessees of Better Place vehicles is far less clear. With Better Place’s declaration of bankruptcy, the company was appointed a receiver, who is 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. But on his first day as receiver, Professor David Hahn of Bar-Ilan University said that in his opinion, there was nothing to do but liquidate the company.
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 — and finding a buyer for the company would be a Sisyphean task. Better Place’s subsidiary companies (all of which filed for bankruptcy Sunday) have already nominated a liquidator; and they did not ask the court for protection so they could continue operating.
Despite that, some customers who spoke to The Times of Israel were optimistic that the company will not only continue to operate, but may even thrive. Andrew Paul Stewart Hamilton, an immigrant from Australia, is not only an attorney experienced in bankruptcy matters, but is also a Better Place customer. “The job of the liquidator is to sell off the assets of the company, or to find a buyer for the business, with the goal of getting as much money as possible for creditors and investors,” Hamilton said. “We need to be clear: Better Place is worth zero unless its charging network is operational. There are currently 38 battery-swapping stations around the country, and they work wonderfully. But if they were to stop operating, Better Place would be worthless, because they are the single asset the company can offer that is worth money.”
That includes the batteries, which, Hamilton said, are essentially worthless outside of the vehicles and charging stations. “Each battery weighs 250 kilos (550 pounds), so transporting them overseas is going to be out of the question.” Hamilton also dismisses rumors that a liquidator would try to repossess the batteries in Better Place vehicles currently on the road, as the batteries themselves are the property of Better Place; officially they are valued at $10,000. “By the time they got it out of the car and transported it overseas, there would be no profit whatsoever,” said Hamilton. “Removing them will cost more than they are worth.”
That Better Place values the batteries at $10,000 does not make it so, Hamilton said. “Those batteries fit only these Renault Fluence cars,” and there is no other market for them other than the current Better Place customers — especially since Renault announced earlier this month that it would stop making Fluence models with swappable batteries, concentrating instead on models with trickle-electric charging mechanisms. Not only that, said Hamilton. “In the battery environment, you have more batteries than cars. Without the network, you only need one battery. So unless the charging stations, which automatically change the battery, you are writing off their value.”
The bankruptcy has not affected operation of the charging stations, which are all automated. In the event that Better Place is liquidated and the charging stations remain intact, it is not clear who would be responsible for servicing them. Renault is the address for the servicing of the vehicles themselves.
Brian John Thomas, another Better Place customer who has blogged about his experiences at The Times of Israel, said that he was happy with the car, if not with the bankruptcy. “The car and two switch stations worked yesterday, it filled up with electricity at home last night and I’ll keep driving it until it stops,” he said. “I love the car. As long as I have power at home I can keep it even without the switch network.”
Thomas, too, is somewhat optimistic that the current network, at least in its present form, will continue to operate. “The value of the batteries in those stations is zero if the network closes. There are more batteries in Israel than cars, so who needs another one?”
Neither Hamilton nor Thomas, or other owners they know, is planning to sue, at least not yet. “The only party we would be able to sue would be Better Place itself, but now that it is under court protection there is no point in that,” said Hamilton. If things don’t work out as hoped for, he added, it is possible that some owners could try to get some money out of Renault, but they wouldn’t be getting much – certainly not what they paid for their cars.
What could save Better Place, said Hamilton and Thomas, is the “vision thing,” the idea that Israel needs to be energy independent, and that electric cars are an important means to that independence. “I bought my car in January, when Better Place was already in poor financial shape, so I was aware that something could happen to the company,” said Hamilton. “But I believed then, and still believe, that the government will intervene, and at least help to try and find a buyer for Better Place. The idea of electric cars, especially in Israel, is too important to let die with Better Place.”
Employees — actually, most of them are now ex-employees — of Better Place are also optimistic, if a bit less so than the customers. One employee, who asked to remain anonymous, said that he had been with the company for two-and-and-a-half years, with Monday his final day of employment, as he and about 350 others were let go.
“The bankruptcy announcement was both surprising and not surprising,” the employee told The Times of Israel. “We have known for a few months that the company was basically out of money, and had enough to keep going until August. Plus, we had not heard about any new investments recently. But we thought that the Israel Company, our principal investor, would keep the company going a little longer, after having invested so much.”
In truth, the employee said, Better Place had been selling cars for just six months — and sales this year were actually better than those of the Toyota Prius (426 Fluences vs. 400 Prius models), the best-selling hybrid passenger car. “It was definitely surprising they pulled the plug now, rather than waiting a few months to see if sales picked up, especially after the company announced new specials and deals for buyers and lessees last month,” he said. “Apparently the Israel Company crunched the numbers and decided that investing any more in us would be throwing good money after bad.”
Regarding the future, the employee said that the feeling in the company is that the current swap stations will continue to operate — probably. “They might sell the equipment or the land the stations are located on to raise cash, but that probably wouldn’t bring in too much. It’s also possible that the stations will be bought and operated by another company. Certainly the charges spots in customer’s homes will remain in place. Regarding the batteries, the employee wasn’t sure what a buyer of Better Place assets could do with them, other than sell them to car owners.
But he did believe that the government would do whatever it could to keep the electric dream alive. “Everyone who worked here believed they were doing good. The ideas about improving the environment and weaning Israel off foreign oil weren’t just copy for press releases; all of us believed, and still believe in those goals, and the government does too.” The infrastructure, once laid out as it has been, now has value-added beyond the value of the land, equipment, and batteries.
“We felt as if we were on a mission, and even those who came to work here and saw their job as just a job became infected with the enthusiasm the rest of us had,” the employee said. “We felt we were doing good for the world, and for Israel, and for those reasons many people wanted to work here. That is the same vision the government has. I don’t think the government, and the Israeli people, are ready to throw that away.”