Last week, "Time" magazine devoted an article to the upheaval at electric car venture Better Place Inc. "As promised, the landscape of Israel is dotted with battery-switching stations, 27 blue-and-white buildings bearing the logo of Better Place, the most ambitious electric car enterprise in the world. The batteries are right there too, rows of lithium-ion blocks that can be lifted in and out of the rear of a four-door Renault Fluence in a bit more than the time it takes to fill up at the pump. The only thing that’s missing is the cars - or, rather, the people who want to drive them."
This comment comes just three years after "Time" named Agassi as one of its 100 people of the year, and it encapsulates Better Place's current condition: it has vision, technology, and a business model; but it lacks customers prepared to take the risk and pay for it. Moreover, the shocks accompanying the company's restructuring exacerbate the risk perception by the average Israeli customer, and drive him further away for the chances of a rapid recovery by the company.
Kaplinsky's departure today was taken by the car leasing sector as a kind of quiet triumph. The leasing companies have been careful not to jump onto the electric car bandwagon, and most of them are on the way out. The only thing that can now renew Better Place's sales is government intervention, such as by offering large breaks on the use value of electric cars, as the Ministry of Environmental Protection wants. Alternatively, Better Place could offer an aggressive credit policy to ease the financial risk to the leasing companies.
No such financing company exists, and as time passes, the chances of one being established diminishes. Notwithstanding all of this, it should be remembered that Better Place's investors, headed by Israel Corporation (TASE: ILCO), injected $100 million into the company last month, which is an important lifeline and a vote of confidence.
It is possible that they know something we don’t, but if it turns out that there is another rabbit in Better Place's hat, this is the time to pull it out.
Published by Globes [online], Israel business news - www.globes-online.com - on November 14, 2012
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