Better Place Turns Out to Be Not Better Enough

Better Place's bankruptcy filing this last weekend is a blow not merely to the company itself and its influential backers, but to the vision of an electrified automotive future. This is because Better Place had what seemed an extremely persuasive business model and a sensible plan for developing the plan in the marketplace. It offered potential customers the opportunity to buy cars with electric batteries that could be swapped out in minutes at stations, rather than having to go through the long tedious process of recharging them when on the road, and the option of paying for electric energy on a per-use basis rather than having to buy an expensive battery pack up front. The system was to be rolled out first and tested in Denmark and Israel—small, well-defined, and tech-savvy markets.

The vision, propounded by the company's founding CEO and inspirational figure, Shai Agassi, had won support from major investors like GE, UBS, Morgan Chase, VantagePoint Venture Partners and Lazard Asset Management, among others. Renault's equally charismatic CEO Carlos Ghosn equipped the company's Fluence Z.E. sedans with the Better Place system, making it an important part of the Renault's four-billion-euro electric vehicle strategy. So the Better Place backrunptcy is a big blow to Ghosn and Renault too, though the French car company denies that of course.

Better Place is not the only bad news in electric vehicles. Fisker Automotive is teetering on the edge of bankruptcy, with  its founders seeking to buy up almost $200 million of Department of Energy development loans at small fraction of their face value. Fisker also had influential backers, including battery maker A123 Systems, itself in serious trouble.

The good news, on the other hand, has been Tesla's continued success, which has enabled the company to raise new money and pay off DOE loans, earning the Federal government a profit, as Tesla's founder has been boasting to the press. The difference between Tesla and Fisker? Earth2Tech/GigaOm's Katie Fehrenbacher says one important distinction has to do with the emphasis Tesla has put on technology development, compared to Fisker. "Tesla spent a lot of money on developing the battery pack, battery management system, and power train. That core technology is what makes up the base of the Model S, and eventually the Model X. Over the years Tesla has made revenue from selling this core technology to big automakers like Toyota and Daimler for development projects… Fisker, on the other hand, is a design firm first and foremost."

Photo: Better Place

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