Better Place sales rise on leasing schemes

After a tumultuous year in which its founder was ousted by the board as CEO and his replacement stepped down after only three months, electric-car company Better Place is starting 2013 on a better note.

In January, the company sold 102 cars, a 136 percent increase over its average monthly sales for 2012 and a dramatic improvement over its dismal December sales of just five vehicles. The improved monthly sales, which represent 20% of the 518 total cars the company sold in Israel last year, are the result of a new leasing arrangement.

“Our target market – greenies, people with a geopolitical agenda and technology adopters – don’t necessarily have NIS 20,000 sitting around to buy a car,” Better Place vice president of sales Zohar Bali said.

While the overall price of the Renault Fluence ZE has not changed, he said, the fact that people can now lease them with a down payment of only NIS 7,900 has broken through two barriers: the initial cost and the uncertainty.

“The fact that you can leave the deal after a year gave people a sense of certainty,” Bali said. “People really connected to it.”

Uncertainty about the company’s product soared over the past year, when the board ousted Shai Agassi, the visionary behind the replaceable-battery system, and replaced him with Evan Thornley, who served as CEO of the Australian division, in October. After only three months in the position, Thornley, too, stepped down, to be replaced by Dan Cohen, the company’s vice president of strategy for four years.

“Listen, it’s no secret we had a big shakeup in the last few months, and that created uncertainty and some confusion,” Bali said.

“But the bottom line is that our investors, from the first day to last day, are still backing us.

“We didn’t touch the prices. What changed, and this was a difference from the previous management, was moving from ‘visionary’ mode to ‘operative’ mode, which is now focused on customer service.”

The company has put its international plans on hold to focus all its resources on developing its two test markets: Israel and Denmark (in the latter, it only sold 176 cars in the past 11 months, according to Globes).

“We were expending a lot of energy on getting the idea out to other markets,” Bali said, adding that the Better Place vision is “a very sexy idea, and we got carried away.”

An additional benefit to sales, he said, is the increasing price of gasoline in Israel.

Instead of paying for fuel to get them from place to place, Better Place customers pay the company NIS 0.55 or NIS 0.65 per kilometer for their car’s power, depending on the subscription package. With gas prices up to NIS 7.83 per liter, only the most fuel-efficient cars could compete.

The company still has major challenges to deal with, including a reduced workforce.

In December, it announced plans to lay off 150 to 200 employees, which followed a prior cut of 140 workers, representing an almost three-fourths reduction of its former 400-strong staff.

Industry sources said the company’s reliance on just one car manufacturer, Renault, means it has little leverage in reducing the overall price of its cars to meet market needs. Despite the encouraging uptick, Better Place cars represented only a tiny fraction of the 22,000 cars sold in Israel in January. As a result, Bali said, the company remains focused on selling enough vehicles simply to legitimate its product and business model.

“Remember, up until recently, people were asking if it was even possible to drive an electric car with a switchable battery,” he said.