Some ambitious green dreams fail and just fade away (Solyndra for example). Others fail but get a second chance. Better Place is lucky enough to be included in the second group. Less than two months after the company filed for bankruptcy, Israeli courts approved the recommendation of the company’s liquidators to sell all of its operations and assets in Israel to a group of U.S. and Canadian businessmen backed by the Association for the Promotion of the Electric Car in Israel.
The buyers will pay will pay about $5 million for Better Place Israel’s assets and $6.9 million for Better Place’s intellectual property. This is quite a good price considering that $800 million has been invested so far in Better Place, but as one of the lawyers involved in the liquidation process told Israeli newspaper TheMarker “while it looks like a small price was paid for a luxury boat, you need to remember this ship sank.”
Better Place’s founder Shai Agassi was accused by some of being an unrealistic dreamer with his vision to “take one country off of oil and do it in a replicable way, based on today’s technology.” That doesn’t stop the new buyers from having their own dreamy vision. Yosef Abramowitz, one of the owners of Arava Power, Israel’s leading solar developer who is heading the group of buyers, told Israeli newspaper Haaretz that he’s buying Better Place out of Zionist motives, and that “he wants to turn Israel from the startup nation into the electric-car nation.”
The Zionist vision of the new owners also seemed to help them in the bidding process. One member of the Association for the Promotion of the Electric Car in Israel tried to convince the court that since the buyers are motivated not by economics but by a desire to strengthen Israel, their bid should be considered favorably. Well, apparently it was.
Abramowitz’s group will have to address many issues that will require not just Zionist passion but also some excellent business skills. First the company is still losing money. Haaretz reports that even after shutting some stations and reducing its manpower, Better Place’s operating expenses are around $1 million a month, while its revenues are currently only around $270,000 a month.
Abramowitz himself admitted the company will be operationally balanced only after it sells 5,000 cars. Yet so far the company has only 1,000 customers and it has only 350 more cars at its disposal to sell. On top of that, with the change in ownership, the company lost its license to import Renault vehicles. So how exactly the new owners plan to reach the goal of selling 5,000 cars? Abramowitz said he intends to open the company’s charging network to all electric cars, even those that are not owned by Better Place customers.
In addition, the new owners agreed to take on a number of obligations that will make it difficult for them to cut expenses – from employing 50 of the company’s employees and maintaining some of the company’s office space to leaving 15 (out of the current 20) replacement stations operational at least for 2 years.
In all, the Abramowitz group mission looks almost like Mission Impossible, given the end of the company’s relationship with Renault, the fact that no other car company besides Tesla has plans to build electric cars with swappable batteries, and the laundry list of other issues that led to the demise of Better Place, like Israeli bureaucracy or lack of support from the Israeli government. Even the Israeli car market seems to be skeptical – for example, the Israeli version of the Kelly Blue Book removed Better Place’s cars and I doubt they’ll be added back anytime soon.
It will probably take no longer than 12-18 months to see if Abramowitz’s bet on Better Place succeeds. The challenge is not an easy one with all the pieces that need to fall in place, from new electric cars with swappable batteries to operating in a market that has a little trust in the company. Even though Abramowitz knows a thing or two about green challenges in Israel and had prior success as a green pioneer, launching Israel’s first solar field, this one might be a tough cookie.
One thing we do know for sure is that if the second chapter is a failure it won’t be written on Better Place’s name. Abramowitz told Haaretz the company will receive a new name via a competition to be held on Facebook. Who knows, maybe changing name will also change the company’s luck.
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.