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Wildly ambitious EV battery-swapping firm Better Place is closing shop, as per reports from AP.
Dan Cohen, the firm's current CEO, said that the startup had no choice but to file for liquidation and “to find the best way to minimize the damage to its employees, customers and creditors," as reported in the New York Times.
The firm had a grand vision of car-transportation-as-a-service, along with specially designed fleets of cars and construction of battery charging/swapping stations. Renault's Fluence electric sedan was the only car built which complied with Better Place’s battery swapping system, although fewer than 1,500 were deployed. The Renault models were plug-ins and home rechargeable as well.
If this were a contest between two schools of thought on the future of automotive infrastructure, then swappable batteries have lost and integrated batteries like those of Tesla have won. For now at least.
Better Place was founded in 2007 by SAP alum Shai Agassi and raised about $850 million from investors including Israel Corp., controlled by billionaire Idan Ofer, General Electric, HSBC Holdings, the European Investment Bank, Morgan Stanley. VantagePoint, UBS AG, Ofer Group, Lazard Asset Management, and Maniv Energy Capital. I've spoken with numerous VCs who were dubious of the business model but almost made the investment based on Agassi's persuasiveness. In my discussions with the company, a cogent business model was difficult to detect and was flawed by its inherent reliance on the current limitations of EV and battery technology.
The demise of the company is not a complete surprise. Founding CEO Shai Agassi was fired in October of last year, another CEO was fired in January, pilot programs in the U.S. were canceled, and Better Place's operations in the U.S. and Australia were scaled back in February. The intention was to retrench in the two countries where it was furthest along: Israel and Denmark.
The structure that Better Place proposed penciled out better in small nations, island nations, and regions with high gas prices. And it was better suited for automobile fleets: Better Place's biggest customers in Israel were to be taxis and delivery vehicles.
Disrupting a nation's automotive infrastructure is going to cost much more than $850 million -- with a budget and timeframe that challenges the venture model.
Better Place now ranks with Fisker ($1.2 billion) and Solyndra ($1.1 billion) in the VC startup implosion club, along with MiaSolé, Nanosolar, and SoloPower. Better Place also stands with Fisker, Coda and Bright Automotive as testaments to how difficult it is to build a car company and the general unsuitability of VCs and the VC model to the automotive market (the exception being Tesla, which currently trades at $97.08 per share with a market cap of $11.2 billion).
Here's an Israeli Renault-owner and Better Place customer with praise for the soon-to-be-bankrupt company's technology and customer service.
Better Place promotes its battery switch model: