In a surprise move, electric car venture Better Place announced yesterday that founder Shai Agassi would be immediately replaced as CEO by Evan Thornley, the current CEO of its Australian subsidiary.
- Shai Agassi's Better Place Electric Cars Take to the Highway
- Is Better Place Running Out of Juice Before It Hits the Road?
Agassi set up Better Place with the aim of using new technology to make electric cars more affordable and more convenient than gasoline-powered cars. Better Place operates networks of stations where drivers can stop to exchange depleted batteries for new ones, or charge existing batteries, thus helping increase the cars' range and feasibility as a driving option.
Through a partnership with Renault, Better Place is close to completing nationwide networks in Israel and Denmark and has started work in Australia, although there are limited numbers of electric cars on the roads so far. For longer trips, its infrastructure includes changing stations that allow travelers to swap their batteries in a matter of minutes, avoiding the lengthy process of recharging.
Agassi, a former top executive at German software maker SAP, will remain as a director and shareholder, the company said in a statement yesterday. He is expected to have little influence on the firm from now on.
Better Place, which has raised approximately $800 million in the five years since Agassi founded it, has lost approximately $477 million since the beginning of 2010, including some $64 million in the second quarter of 2012. These losses are the main reason Agassi was ousted, though the company did not say he was fired, only that he was "stepping down." At the end of June, the company had some $131 million in cash left in its accounts.
Following the announcement, Agassi said he has faith in the team that developed the electric car and was "confident in their ability to take the company to the next level."
He continued: "Five years ago I pursued a vision of weaning the world off oil and its dependency on it, and last month I drove across the State of Israel in an electric car ...Very few people get to transform such a complex vision into reality in five years. I am proud of the Better Place people and the team that I am leaving behind who will take this company to the next chapter."
Better Place chairman Idan Ofer, whose Israel Corporation has invested $229 million in the company, thanked Agassi for his service. Ofer praised the company's management as "experienced and strong," saying it would lead the company through its next set of challenges. Better Place had achieved its goals under Agassi and had reached a "natural point" for change, said Ofer.
"Under Shai's leadership, we've successfully achieved our goals in the first chapter of Better Place, and we owe Shai our gratitude for turning his powerful vision into a reality," Ofer said.
Better Place was careful to say Agassi's ouster was a "joint decision" by Agassi and the board, but automotive industry sources say the decision to fire Agassi was made by the Israel Corporation due to the slow and bumpy entry of the company into the Israeli and Danish markets. "Better Place has passed the stage of visitors centers and slogans on weaning off of oil. Now they have to sell cars, and that simply isn't happening," said one senior executive in the Israeli leasing industry. Since its July launch, Better Place has delivered only 457 cars in Israel, and many of those have gone to its own employees and suppliers. It has only about 200 cars on the road in Denmnark, its second market.
Thornley joined Better Place in 2009 and created EV Engineering, a venture between global automotive leaders to develop and create switchable-battery technology.
"In his four years as CEO of Better Place in Australia, Evan has built an impressive track record, particularly around establishing a strong set of industry partners there. Evan brings the right combination of entrepreneurship and coalition and team building to take Better Place to the next level," Ofer said.
The Israel Corporation conglomerate owns 32% of Better Place and was one of the original investors.
Agassi leaves behind a company that has won widespread praise and attention for his expressed vision of ending the world's dependence on oil, but which has struggled at times to carry out that vision.
The company has burned through hundreds of millions of dollars, caused in part by a slow rollout of its network and reluctance by consumers to accept electric cars. The company says that despite the heavy start-up costs, it remains on solid footing and is optimistic about the future. After testing the system for several months, it recently began sales of its all-electric Renault Fluence model to the general public.
Altogether, it has raised $750 million and recently secured a 40 million euro loan from the European Investment Bank.
Said Thornley: "Four years ago, Shai asked me to join the Better Place mission and bring it to Australia. It has been my pleasure to lead that effort along with my colleague CEOs in Israel, Denmark and now the Netherlands. Today, it is an honor for me to step up and lead this fantastic global team on a day-to-day basis ... We start the second chapter with a tremendous strength of global investors and management team. "
A colossal failure ahead?
Better Place is one of Idan Ofer and the Israel Corporation’s biggest bets since the Ofers bought the company in 1998. The Israel Corp. has invested $229 million in Better Place so far, but it is valued at only $70 million on its books as of the end of June.
Better Place has cumulative losses of $477 million since the beginning of 2010, and its financial results have set it on a path to become possibly one of the biggest business failures of the last decade. The company has $131 million in cash and cash equivalents on hand, but considering the pace it is burining cash $40 million a quarter it is not a long way from running on empty.
Better Place managed to raise 40 million euros at the end of August from the European Investment Bank, but 30 million euros of this amount are for completing the network of charging stations in Denmark, with the rest going to fund its Israeli operations.
The company has committed to buying 100,000 cars from Renault by 2016, but has sold only some 500 so far in Israel and Denmark.
After raising $800 million, Better Place showed only $2.4 million in revenues for the second quarter of 2012, up from $300,000 in the first quarter. The second quarter operating loss was $48 million.
Agassi told TheMarker a month ago that the company would be profitable when it reached a market share of 0.5% to 1% of the Israeli car market some 10,000 to 20,000 cars.