Better Place dead in the water as green technology fails to impress
By Quantum Capital Fund
Despite significant global demand for green energy technologies, which reduces carbon emissions released by fossil fueled vehicles, Israeli start-up Better Place is in the process of filing for liquidation. This shows that although there is demand for green technology, the market is characterized by significant challenges.
Technology website cnet.com reports that Better Place wanted to make the world a better place by replacing gas stations with battery switching stations that would remove the driving mileage limitations from electric cars and eventually rid the world of fossil-fuel burning vehicles. But after six years and burning through $850 million, the company is filing for liquidation in an Israeli court.
"This is a very sad day for all of us. 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. Unfortunately, the path to realizing that vision was difficult, complex and littered with obstacles, not all of which we were able to overcome."
Cnet adds that in 2008, Better Place partnered with Renault to build an electric car and create a system of battery swapping stations along highways, similar to gas stations. However, the concept never gained momentum, with less than 1 500 electric cars operating in Israel and Denmark today.
Reuters cited a report from Israel, owner of about 30% of Better Place, that the company had accumulated a deficit of $561.5 million and was expecting more losses. Subsequent efforts to raise more funds were unsuccessful, leading to the shutdown of the company.
There are a number of challenges which the company had to overcome in order to make its technology a success:
- Cost Containment. Because of the high costs of developing this technology it would have had to be passed on somewhere in the value chain, which would have pushed up the purchase price of the vehicles.
- Performance. If you are replacing one technology with another you have to be certain that the new technology performs on par, or better than the older technology. There is no indication that green technology performs better than fossil fueled technology.
- User Attraction. How would Better Place convince users to abandon fossil fueled technology for green technology. Performance drives the industry and if your product doesn’t perform you are fighting a losing battle.
The only feasible way to overcome these challenges is through a programme which involves government participation.