It was supposed to be the car of the future, a near-silent, battery-powered vehicle that would wean the West off its dependence on Middle Eastern oil and save the environment in the process.
And an Israeli company seemed destined to build it.
Better Place, founded in 2007 by the exuberantly confident Israeli entrepreneur Shai Agassi, was based formally in Palo Alto but was steered from Israel, where Agassi and most of the major investors lived. It was trumpeted as the king of Israeli startups, a company that would keep the air clean and the streets quiet while saving money for its users.
Six years and more than $850 million in venture capital later, the dream lies in tatters.
On May 26, Better Place declared bankruptcy, its management transferred to a liquidator and the future of its 38 battery switching stations in Israel undetermined. Thousands of vehicles built for the company’s network sit unsold in lots, their future uncertain. The Palo Alto office closed in February.
Better Place had raised hopes that someone finally had figured out how to bring an electric vehicle into mass usage. The company appeared to have hit on an innovative solution to problems that had long bedeviled electric car makers: limited range, lengthy recharge times and consumer reluctance to shell out big money for an experimental technology.
The company adopted a model similar to the cellphone industry: Drivers would pay a monthly fee for access to a network of stations where they could swap batteries in about the amount of time it would take to fill a tank with gasoline. Customers also could charge their cars at home for free.
Former employees, customers and experts paint a picture of a company that grew too big, too fast, built a car too expensive and impractical, and chafed under management with a penchant for burning through cash.
“I don’t think Better Place failed due to a mistake in technology,” said Sam Solomon, a venture capitalist and the chairman of Mobideo Technologies, which sold charge-station software to Better Place. “It ran too fast with too much. They did not get enough of a critical mass in a single market in order to demonstrate success.”
The company’s downward spiral began last year; Better Place lost more than $450 million in 2012. Agassi was ousted as CEO in October, and the company would go through two more chief executives before falling under the control of a state-appointed liquidator.
Israel was the company’s principal market, its system seemingly well suited to a country where most drivers stay within a densely populated central region and the price of gas is high.
Investors believed in Agassi’s vision, buoying him with $850 million in funding. Even before the Israeli venture launched, Agassi had started a second network in Denmark and was planning others — in Australia, the Netherlands, China, Japan and the United States, in San Francisco and Hawaii.
Agassi exuded confidence, predicting that by 2010 there would be 100,000 Better Place cars on the road. The actual number turned out to be zero. The first charging station was opened in 2008, but the cars, manufactured by the French company Renault and sold by Better Place, were not available for purchase until 2012. Better Place sold fewer than 1,000 cars in Israel.
One of Agassi’s defenders, former Better Place director of policy Yariv Nornberg, said Israel could have done more by providing tax credits for electric car drivers. Denmark offers a $40,000 tax break to promote electric cars.
Better Place’s 38 switching stations in Israel may close this month, but some customers say they’ll still happily drive their cars, which they say provide a cleaner, quieter and smoother ride. Without the stations, they will have to charge their cars at home.
Despite the setback, Nornberg still sees a bright future for the electric car industry. Better Place, he says, might have failed commercially, but it was ahead of if its time.
“It’s not about buying the gadget,” he said. “It’s another means of transportation that’s better for the public.”