Better Place losses reach $360m

The electric car infrastructure venture is still in the development stage, and does not yet generate revenue.

Shay Agassi's electric car infrastructure venture Better Place LLC has lost $360 million since it was founded, mostly in the past two years, reports Israel Corporation (TASE: ILCO), which owns 31.5% of the company, in its financial report for 2011. This was the first year in which Israel Corp disclosed the results of Better Place. Its share in Better Place's loss is $152 million.

Israel Corp's two ambitious car ventures - Better Place and its joint venture with China's Chery Automobile Company Qoros Automobile Company - lost $321 million in 2011, $213 million by Better Place and $108 million by Qoros.

Better Place's cash outflow rose to $163 million in 2011 from $121 million in 2010. The company is still in the development stage, and does not yet generate revenue. Its sales and marketing expenses rose 13% over 2010 to $54 million, and its R&D costs doubled to $75 million. Expenses totaled $200 million in 2011, equal to its operating loss, and its shareholders' equity deficit rose to $320 million.

Despite the losses, Israel Corp. CEO Nir Gilad is optimistic. "It's like saying that an investment in a start up is a loss," he said, adding, "We still think that this is a very challenging project, but we've made progress on technical issues, which are now off the table, and we see that the bottleneck is in the infrastructure. Meanwhile, most carmakers now see that the switch to the electric car has arrived."

Qoros has lost $208 million since the joint venture was set up. The share of Israel Corp., which owns 50% of the venture, in the loss was $54 million in 2011 and $39 million in 2010.

Qoros also has no revenue yet, but Gilad is also optimistic about it. "The project has moved from paper to the field," he says. "The first test cars are already on the road, and we're planning the first sales by the fourth quarter of 2013."

Qoros' cash outflow from operation rose to $137 million in 2011 from $28 million in 2010, and its R&D expenses rose to $88 million from $62 million. Israel Corp. and Chery each injected $44 million into the joint venture in 2011, and an additional $36 million so far this year, as part of the plan to boost its shareholders' equity to $206 million. The two partners have each invested $312 million in the venture to date, for a total investment of $624 million.

Published by Globes [online], Israel business news - www.globes-online.com - on March 29, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018