No more better place

Image credit: Better Place Facebook

Following the success of the Toyota Prius and other hybrid vehicles over recent years, the next generation of exclusively electric cars such as the Nissan Leaf and almost fully electric Chevy Volt have entered the mass market. Good timing you would think for Better Place, the $850 million start up with some of the world’s keenest business brains at the helm to bring their battery exchange offer to market.

Wrong. Better Place filed for bankruptcy protection earlier this year. Why could such and enterprise fail? There are many suggestions, all of course with the benefit of hindsight and in the spirit of “Success is about learning from failure” then here are our top ten reasons:

1. The technology was wrong. This should be number 1,2 and 3 because really a start up with the wrong technology should not even bother to enter the market place. Better Place to remind those of you unfamiliar, was to offer battery replacement for electric vehicles which potentially offered the twin benefits of: a) Longer range by not having to wait for the batteries to be recharged b) Lower capital cost of the vehicle for the owner because the battery packs would be owned by Better Place and leased to the owner. Battery replacement may be worthwhile for taxis and delivery vehicles that may be in constant use but for the rest of us plugging in our electric vehicles at home, office or on the move via a fast charging system is perfectly fine. In fact, it’s more than fine, a de-centralised, simple system of recharging is one of the most appealing features of electric vehicles. No need for lease contracts and in the future, for those who install home solar PV, wind turbines or micro CHP then the possibility would exist to provide a component of the battery charge from a completely ‘Free’ source. Better Place chose a route requiring sophisticated battery exchange equipment within a physical structure requiring building permits and so on which became hugely expensive and we say unnecessary.
2. Batteries are not mobile phones. Better Place likened their product and more particularly the ownership model to that of mobile phones. Customers were not convinced. However cars are like mobile phones, they enable us to do an amazing array of tasks and more. Batteries are a necessary evil that provides the energy to empower cars and mobiles phones. The smaller and more powerful the battery the better. Rather than focus on getting us to all sign up to their lease agreements Better Place would have better spent the $850 million start up investment in developing a “Super” battery which was very powerful, lightweight and cheap. This is really what the market desperately requires.
3. Not obtaining car industry buy-in. To have a sufficient customer base, Better Place should have been able to exchange batteries in a wide range of electric vehicles. Battery technology is closely guarded by the car companies and in the end despite many companies being “Interested” only Renault agreed to partner Better Place.
4. Not obtaining government buy-in. For a business plan that relied on hooking in a significant number of customers, Better Place should have been more successful at the outset in converting positive noises from government into tangible support.
5. Too big too soon. Why was it necessary on day 1 to create dedicated battery change centres that would delay launch and soak up so much cash? What was wrong with making strategic partnerships with existing petrol stations networks, shopping centres and so on?
6. Beware of charismatic, smooth talking gurus who made their fortune in an IT business. Sorry to be unkind to Shai Agassi the mercurial founder of Better Place but he was not objective about his system compared to the plain home/work charging? To listen to him he seemed almost maniacal in his belief. Why? Because his business plan relied one creating a virtual monopoly and this is possibly why other “Interested” potential stakeholders were wary of him.
7. Not delivering on promises. The purchase price of electric vehicles without batteries were still high despite the batteries being provided on a lease basis from Better Place.
8. Eco is not enough. Given two identical products, the more environmentally friendly one should prevail in most cases. However expecting customers to forego any perks they had become accustomed to and change habits they were very comfortable with needs more of a pull than just ‘Eco-friendliness’. Like it or not an eco product is just like any other product, it has to offer real benefits and commercial advantages. In theory this should always be the case because eco products should be less consuming of fossil fuels. In reality any new product has to overcome huge obstacles to enter the market which established businesses do not face which sadly suppresses innovation.
9. What’s wrong with candy. Why did Better Place think they were so different from the ultra- competitive traditional petrol stations refuelling market which rely on revenues gained from selling groceries to top up profits.
10. Cool, but not as cool as Tesla. Better Place clearly looks good but the product has to deliver too. Tesla’s US supercharge centres look amazing too and offer free for life electric charging for their customers which takes 40 minutes for an 80% charge, pcerfect for a lunch break. How cool is that? Tesla are currently expanding their network of dedicated supercharge centres and say they will also offer a quick 90 second battery pack swap (which is not free).

What next. Apparently Better Place has been sold to Sunrise for $10-$12 million, a mere fraction of the money invested. But what is there of any value left? Our only suggestion is the new owners firstly address some the above points and focus on niche markets such as taxis, local municipality vehicles and possibly expand from there. Good luck.

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