Leasing exec: Axing Agassi hurts Better Place

Industry sources believe that only an aggressive government move can give Better Place the sales push it needs in Israel.

"Shai Agassi's resignation as CEO of Better Place Inc. is liable to put a spoke in the wheels of marketing electric cars to vehicle fleets," a top car leasing executive told "Globes". "The announcement of Agassi's ouster comes at a critical and problematic point in time, when the company is in talks with several large fleets for the supply of hundreds of electric cars. It doesnt help the atmosphere, to put it mildly."

The executive added that, following Better Place's announcement, his company received calls from car fleets that were in talks to buy electric cars via leasing. "Customers wanted to know the effect of the move on the company's future. We directed them to Better Place," he said.

To date, most of the leasing companies that have bought electric cars did so on the strength of Better Place's guarantee to buy back the cars after the use period. The leasing executive believes that this guarantee weighed on Better Place's finances, and was largely responsible for the slow pace of sales to leasing companies.

Industry sources believe that only an aggressive government move can give Better Place the sales push it needs. Such an act could greatly reduce the monthly use value for employees who opt for an electric company car. Several months ago, Minister of Environmental Protection Gilad Erdan proposed abolishing the use value for electric cars. In a letter to Minister of Finance Yuval Steinitz, Erdan noted the many difficulties that drivers of electric cars face, including limited travel distance and locations of battery recharging and replacement points, and the lack of parking.

Electric cars already enjoy tax breaks: a purchase tax rate of 8%, compared with 30% for hybrids, and their use value is calculated only on the basis of the car's value, excluding the battery. In June, the Ministry of Finance extended the purchase tax break on electric cars.

The foreign media is astonished at Agassi's ouster, as he is considered overseas as Better Place's central figure. "Forbes" quoted an interview with Idan Ofer (the chairman of Better Place's controlling shareholder Israel Corporation (TASE: ILCO)) by Green Tech columnist three weeks ago, in which he gave no hint of the troubles behind the scenes at the company. "As far as Im concerned, Better Place has proven what it set out to do successfully, said Ofer. Its abundantly clear that it works and it works well and everything we set out to do from day one weve actually done. There isnt a single issue that was put into the business plan that we havent done."

Ofer said, "Money needs scale. The faster we scale up and refine the model, the faster well be making money. I would say theres probably two years, three years to go. Thats not what concerns me, he added. What concerns me is that I want to scale as fast as possible and I want to be all over Europe." He added that Israel Corp's investment in specialty foundry Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) took a decade to pay off.

The "Financial Times" wrote, "Mr. Agassis removal as head of the company he founded comes amid growing doubts in the motor industry about appetite for electric cars, which some analysts say are struggling to justify their higher price tag relative to conventional cars."

"The Wall Street Journal wrote, "Mr. Agassi's departure as chief executive would follow a pattern among other start-ups in which founders are replaced at the helm by managers in order to oversee growth. It quotes Edmunds.com editor John O'Dell as saying, "It's part of the business school literature: a transition from an entrepreneur manager to a business manager. The vision is established, and now they need a hard-nosed manager to manage the thing, to make the business ties, and do the selling." He added that enthusiasm for electricity-fueled cars has cooled in the US in recent years.

Published by Globes [online], Israel business news - www.globes-online.com - on October 3, 2012

Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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