Better Place Asks Court to Appoint Liquidator as Last of Its Cash Runs Out
The revolutionary electric car company asked an Israeli court to appoint a temporary liquidator; 'This is a difficult day for all of us,' CEO Dan Cohen says.
Better Place, the once high-flying electric-car venture, yesterday asked the Lod District Court to dissolve the company and appoint a temporary liquidator after the firm failed to raise additional capital to keep its operations going.
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“Unfortunately, after a year’s commercial operation, it was clear to us that despite many satisfied customers, the wider public take-up would not be sufficient and support from the car producers was not forthcoming,” CEO Dan Cohen said.
Better Place was perhaps Israel’s best known clean-tech company and its biggest startup as measured by capital raised from such blue-chip investors as General Electric and HSBC. Founded by Shai Agassi, a well-known technology entrepreneur, the company partnered with the French auto maker Renault to develop a network for electric cars that combined charging terminals with battery-swap stations.
Their aim was to increase the limited driving range of electric vehicle, which has been one of the biggest obstacles to widespread acceptance Israel, along with Denmark, was the company’s test market for developing nationwide networks. But the company experienced repeated delays in getting off the ground and little demand for its cars. In yesterday’s motion, it said revenues came to just $7 million last year and it is suffering from a negative cash flow.
“We stand by the original vision as formulated by Shai Agassi of creating a green alternative that would lessen our dependence on highly polluting transportation technologies,” Better Place said. “The vision is still valid and important and we remain hopeful that eventually the vision will be realized for the benefit of a better world. However, Better Place will not be able to take part in the realization of this vision.”
In fact, the company said yesterday that Israel Corporation hopes to sell Better Place as a going concern. Nevertheless, it wants a liquidator named to stanch the flow of cash out the company.
In the six years it was in operation Better Place lost $812 million − $454 million in 2012 alone − and now has just $9.5 million in cash left. The company could only survive if Israel Corporation had agreed to come through with more cash, but discussions between Idan Ofer, its chairman, and Better Place’s other investors yielded no agreement. Yesterday, Israel Corporation’s board opted not to inject additional funds into the struggling venture.
Israel was an ideal laboratory to try out Agassi’s vision of electric cars, thanks to high fuel prices, a supportive government and very limited distances drivers can go. Some 90% of car owners drive less than 70 kilometers.
But fewer than 1,000 vehicles were sold and the company’s charging stations remained largely empty. Renault sold a battery-powered version its Fluence sedan at roughly $32,000, on par with similar models, but it was the only model available.
Among Better Place’s troubles is money it owes to the French automaker, which developed a special version of the Fluence for Better Place in exchange for a commitment to buy 115,000 vehicles. Under an agreement between the two companies, Better Place’s failure to meet the quota exposes it to penalties of up to $152 million a year for 2011 and 2012.
The auto-leasing companies that were some of the biggest buyers of the cars were entitled to sell them back to Better Place after three years, but now their value is nil. Nevertheless, the leasing companies didn’t express concern because of the small number of vehicles involved.
“We didn’t think we would make money on this,” said one executive, who asked not to be identified.
As to private individuals who bought the cars, Better Place’s collapse spelled more trouble. Drivers already in possession of a car can count on the company proving services until the liquidator makes a decision on the company’s fate. Those who paid in advance for a car will now also have to wait for the liquidator.
Owners interviewed by TheMarker yesterday expression confusion over what had happened, but said they wanted to continues using their cars. “I would be sorry to have to go back to a gasoline car,” said Effi Shahak, an information systems consultant from Herzilya. “I hope the charging infrastructure will continue to operate as usual.”
