Last month, the Israeli-based electric vehicle company Better Place declared bankruptcy. But rather than seeing this as a blow to the EV industry, there are valuable insights and lessons to be learned from the Better Place model that may help the next generation of electric vehicles.
As with any new and novel industry, there are bound to casualties along the way. Sometimes companies move too fast or innovate beyond the capacity of the market. This seems to have been the case with Better Place. From the beginning, the founder and CEO Shai Agassi envisioned an entirely new way to handle electric vehicles. Understanding the problems of range anxiety and the time it takes to recharge batteries, Agassi developed a “drop in” model whereby drivers could stop at a recharging station and quickly trade out their low battery for a fully charged one in about the same time it would take to fill a gas tank. Brilliant idea number one.
Then, brilliant idea number two: Agassi saw that with battery technology improving rapidly, many consumers would be hesitant to purchase EVs for fear of lost resale value as new battery technology made their existing system obsolete. To counter this roadblock, Better Place maintained ownership of the batteries and allowed customers to lease them so that they could be upgraded as technologies inevitably advanced.
The biggest hurdles to Better Place’s success were gaining a solid customer base to prove the concept at scale, and finding automaker partners willing to invest in producing cars that would work with the battery “drop-in” infrastructure. Eventually they got Renault to sign on as a partner, but were unable to get other automaker partners in line quickly enough.
Initially aiming to focus their energies in only Denmark and Israel, Better Place switched tactics mid-stream and began exploring ways to expand quickly into multiple markets. As Harvard Business Review blogger Ron Adner wrote, “in my conversations with Better Place executives over the course of the past three years, it was clear that the emphasis was shifting from ‘an idea this novel needs to demonstrate unquestionable economic viability,’ to ‘an idea this good needs to be deployed across the world as fast as possible.’” Adner believes this shift in company mission was a big part of their eventual downfall. If they had remained focused on the small markets in Denmark and Israel, where gas prices are high and taxes on gasoline-powered cars is also high, they may have been able to garner enough relative market share to prove the concept and gain more investment and more partnerships. Spreading the company over too many locations created a situation where limited financial resources were used up too quickly.
Perhaps the greatest lesson to be learned from Better Place is that customers absolutely loved the product. And while other companies have focused on innovations in a certain area of the electric vehicle system — the vehicles themselves, better batteries or charging stations — Better Place looked at the whole ecosystem and sought to rethink and reinvent the way we use EVs entirely. Their innovations may yet serve as the foundation for another company’s success.
Sustainable America aims to reduce oil usage in our country 50% by 2035, and increasing the number of electric vehicles on the road is a critical part of achieving that goal. Companies like Better Place that holistically evaluate the market and aim to innovate the systems in place are helping to push forward the wider adoption of EVs.