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Even Without Shai Agassi, Better Place Offers a Great Deal

Despite press attention, Better Place has not told a competent story to Israelis.
Better Place founder Shai Agassi.

Better Place founder Shai Agassi.
Photo Credit: David Terrar

On Monday, electric car company Better Place announced that Shai Agassi, up to now the face and driving force behind Better Place, was stepping back from his CEO rôle and would continue on as a member of the board and major shareholder. Evan Thornley, Better Place’s CEO in Australia, is stepping up to the global rôle. The news seemed to come out of the blue. The company’s press release about this is here.

I don’t know a lot yet about Evan Thornley, but I will find out more. He certainly pushed Better Place on quite a bit in Australia and, while Renault seems to be a slightly reluctant partner in Europe today, Evan has brought GM Holden on board in Australia and that may turn out to be brilliant.

Timing

If I have a complaint it is about the local timing of this announcement. Just last week Better Place and the local leasing company Albar announced an amazing deal they would be selling at a car show in Tel Aviv this week. They’re offering a 3-year lease for ₪9,990 down and ₪1,990 per month which includes driving 1000 km. Fuel alone for that distance is ₪900 or more. I have personally put two people in touch with Better Place who are close to taking this. I have 3 or 4 more very interested. I’ve had calls or messages from all who are asking if the company will be around to service the lease.

I can’t answer that question. Obviously I need them to continue operating or my car is useless. It’s my belief now, as it was when I bought my car, if Better Place were to fail completely, someone would pick up the local assets at a discount price and continue to run the service. Too much has been spent for it to be written off completely.

As I’ve written so glowingly I think Better Place are doing many things correctly: the product,the pricethe service are all excellent.

Local Advertising

I’m going to make one strategic criticism though. The marketing in Israel has been disappointing. When the New York Times writes “But despite vast publicity, the idea has gained little traction so far.” they’re confusing two different things. Being featured in the Startup Nation book and talked about in global business publications doesn’t affect the Israeli domestic market for cars (or that in Denmark I suspect). Sure it gets a few headlines but the Israeli press has been overwhelmingly skeptical from the start.

I could be very cynical and point out that as car advertising (by internal combustion engine car importers of course) is something like 50% of all media buy in Israel, perhaps the newspapers were just protecting their biggest customers.

But the reality is Better Place has not told a competent story to Israelis. They haven’t advertised in English, Russian or Arabic just for starters. And their advertising in Hebrew has not been enough. There is only one sales centre in Israel: Tel Aviv. There should be one in Jerusalem and Haifa at a minimum. I can’t link to an English version of the lease offer because their web page is in Hebrew only, here’s a brief article in Globes about it. And the terms of the lease are an image so Google won’t even translate it for you.

I know personally how huge this education gap is because of the questions I get asked every time I drive or park my car. Very few people have any idea about the car or actively believe lies and misinformation spread in the press here for 3 years now.

There has been no coherent promotion of just how nice the car is to drive. No promotion of how easy it is to switch or how the home charging works. Of course having only one model hurts them, but as it is  the most popular style of car in the country, not by much.

Shai Agassi and Investment

As to Shai, it is completely normal for a founder of something like this to move or be moved aside when a company transitions into more of an operational stance than a start up. I have met him but I wouldn’t say I know him and I’m not going to give some uninformed speculation about what led to this.

I’m also not privy to the internal financial discussions or the status of the company. I do take slight umbrage when the press talk all about losses and don’t seem to make any allowance for investment. It’s completely normal for an infrastructure company such as this to spend a huge amount of money before getting any back! Just think what it costs to build an entire cell phone network before you make the first call! Are Vodafone or AT&T profitable? They invested huge sums in a network before they got any back.

The difference is that both those companies had other businesses that were ongoing and profitable while they invested for the future. Now they’re spending billions on 4G networks but they’re fortunate to have ongoing profitable business to cover the investment.

My Daily Driving Distance Distribution: How Many Days do I Drive a Given Distance? (km)

EVs Are The Future

There’s no doubt in my mind that within a few years or a decade the world will be transitioning to electrically driven cars. Whether the source of the electricity is a battery (my car), a battery and a petrol engine (Chevy Volt, Plug In Prius) or a hydrogen powered fuel cell (very unlikely in my opinion) the common element is an electric motor driving the wheels. Once you’ve driven a car set up this way you’ll understand why. This Huffington Post article is a pretty good summary (missing only one point – smart grids). John Voelcker’s article here in Green Car Reports is also excellent.

And no matter who’s proposing an alternative to battery switching, be it Tesla’s fast chargers or a Renault Zoe with fancy on board systems to accept very high electric current, nobody is close to the speed of refuelling I get at a switch station. Five minutes gives me 140km. The best anybody else will offer (Tesla with a $100,000 car) is 240km in 30 minutes. So Better Place’s rate is 28km/minute. Tesla’s is 8km/minute. And when batteries get bigger and the robots are pushed faster, Better Place’s refuel rate will go up and Tesla’s will stay largely the same.

Smart Grid

The point missed in the HuffPo article is what a managed system of electric car batteries can mean for a national electricity grid. This is part of what is called the “smart grid.” Better Place has the only significant managed network or smart grid of car batteries than can be used to store cheap or wasted overnight electricity. This is a huge issue and will be massively important as we move from burning fossils over which we have some control of the rate of burning, to renewable sources like wind and solar which blow or shine without any control from us.

This aspect of Better Place is much more strategic than most of the short sighted articles that are damning them as a failure today. It could even be one day this overnight storage of large amounts of renewable energy is so profitable that the company makes more from that and only breaks even on the driving aspects of the business.

Better Place’s Future

I’m not a completely disinterested observer and, when writing here at Israellycool, I’m not pretending to be a journalist. I’m an advocate for Better Place because I like the car, I like the system and I want it to succeed. Beyond that I have an obvious financial stake in the success or at least continued ongoing operation of the company.

There are also machinations in Europe and stories about why they opened a taxi trial in Amsterdam. I’m not an insider and don’t know the details. I don’t know much about the relationship with Renault and the prospect for other models, like the new smaller Zoe, to be brought to Israel or Denmark in battery switching form.

It may well be that Shai Agassi, having done a brilliant job in getting so much built and raise so much money to do it, is not the right guy to run the company today. I don’t know. The insiders I’ve spoken to, who have been there from the very start with Shai, are sad about the move, but optimistic about Evan. Only time will tell. I have heard from a number of sources that the company’s astonishingly high level of customer service flows directly from the wishes and will of Shai and for that he is a master.

Knowing what I know today I’d still buy my car. I’d take that chance. If I was thinking about taking out a lease, I’d only ask what happens if the company is unable to continue giving service: can you terminate with no penalty and walk away? If that is the case I would take the ₪1990 deal on the table right now.

On Monday night my wife and I picked up an old friend and his wife who are visiting from London. We drove 1 hr to Jerusalem, switching on the way. Picked them up at the American Colony Hotel where I answered questions from Arab taxi drivers. We drove across Jerusalem, parked (in Mamilla mall with charge spots but all were blocked). After a meal, back to their hotel and then back to Tel Aviv without switching. Arrived home with 8%. 160km of driving. Easy, fast quiet. Just another easy drive into a better future.

Originally published at Israellycool.

About the Author: Brian of London regularly blogs at Israellycool.com about life in Israel, technology & business topics. He made aliyah from the UK to Israel in 2009, and owns and operates his own import company in Israel with more than 15 staff.


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Better Place founder Shai Agassi.

On Monday, electric car company Better Place announced that Shai Agassi, up to now the face and driving force behind Better Place, was stepping back from his CEO rôle and would continue on as a member of the board and major shareholder. Evan Thornley, Better Place’s CEO in Australia, is stepping up to the global rôle. The news seemed to come out of the blue.

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