One of Israel’s most inspirational startups set out, but failed to build a nationwide infrastructure to support 100-percent electric cars.
By YAKIR FELDMANUpdated: SEPTEMBER 6, 2017 07:42A truly better place: A former Better Place switching station in Beit Shemesh has been repurposed as a tombstonemaking business.(photo credit: YAKIR FELDMAN)
The concept was so compelling that it was almost intoxicating – making the world a better place by the simple yet revolutionary action of choosing to drive a car that didn’t spew pollutants that poison the planet we live on.That was the aim of one of Israel’s most inspirational startups, Better Place, which set out to build a nationwide infrastructure to support 100-percent electric cars. While Better Place went bust just over four years ago, the true story of the company’s spectacular rise and fall has remained shrouded in secrecy, until now.Following more than three and a half years of intensive research and interviews, a new book called Totaled: The Billion-Dollar Crash of the Startup that Took on Big Auto, Big Oil, and the World is to be released this month.Writing the book was something of a catharsis for its author, Brian Blum. A business and technology writer, and Jerusalem Post columnist, who says he obsessively researches products and companies for every purchase he makes, Blum was smitten with the Better Place concept and car and even bought one, uncharacteristically almost on impulse. Within a month, however, the company started to crash.“I needed to find out as a journalist and as a car owner what went wrong. If I didn’t do my due diligence before I bought it, I felt compelled to do it after the fact,” he said, “so I started researching.” Thus a book was born.It all began when the Blum family, looking for something to do on a hot August day in 2012, went to the Better Place Visitor Center in Herzliya to check out the electric car they had heard about in Saul Singer and Dan Senor’s book Start-up Nation. Blum and wife Jody each climbed behind the wheel, zoomed around the test track “and instantly fell in love with the car,” Blum said.“We were incredibly impressed by the power, the astonishing quietness of the car, and we loved the fact that it didn’t use gasoline. The Visitor Center had this incredible movie where they talked about all of the benefits – for the environment and for our pocketbooks as well – because it would be less expensive to own and run. We were hooked; we felt that we simply had to buy this car, even though we didn’t need it. It just was a magical car – it really was.”The Blums hadn’t gone to the Visitor Center intending to buy a new car – the 18-year-old car they had acquired the year they made aliya was still running fine. Yet within a couple of weeks they found themselves making history, positioned among the first Israeli owners of the car that many believed would change the world.Only it didn’t. About eight months after the purchase, the Blums and some 1,000 other owners of the Better Place all-electric Renault Fluence ZE woke up one morning to discover that Better Place had declared bankruptcy.Those first eight months were idyllic, though. The Jerusalemite Blums drove the car often and everywhere – to Tel Aviv, to the Galilee, even as far as the Hula Valley – switching batteries at strategically located Better Place service points as necessary.“We liked that it was the first all-electric car, whose drivers didn’t suffer from ‘range anxiety,’” Blum said, “a problem that had plagued other electric car makers. That’s the fear that you are going to run out of juice in the middle of nowhere, far from a place to recharge.“Better Place had solved that limitation by building a network of battery-switching stations. We would pull up, robots would switch the batteries for us, and off we would go in about five minutes.”After the bankruptcy, though, all of the switching stations were shut down and the Blums, who had bought a car they thought could go anywhere, understood that they now owned nothing more than a limited- range “city car” that couldn’t go more than 120 kilometers or so on a charge.They joined about 250 other drivers filing a lawsuit.“Not only were there no more switching stations, but our batteries were deteriorating and would continue to deteriorate,” Blum explained. That’s what happens with lithium-ion batteries.“They’re just like cellphones or laptops. Over time, they hold less and less of a charge, and will last shorter and shorter amounts of time. I can tell you that after four and a half years of driving our car, the range capability of our battery was down to about 70 kilometers. That’s not what we signed up for. We had no idea what would happen in the end with the car. Would we have to pay thousands of shekels just to have someone tow it away?”In the lawsuit, the owners demanded new batteries with the full original charge capability, but Renault did not have any new batteries to give – they were no longer producing the electric version of the Fluence locally, though a non-battery- swappable version is still available in South Korea. Renault eventually offered to pay the owners a pro-rated amount to take the cars off their hands.“We returned the Fluence, took the money and went looking for a gasoline-powered car. We were terribly sad about it. We didn’t want another electric car with a limited range, but we also hated the idea of going back to a gasoline-powered car.“They’re dirty and smelly; oil and gasoline get on your hands when you are filling it up; instead of charging at home, you have to go to gas stations and wait in line with everyone filling up their cars; and the price of fuel is much higher.“Nothing about it is enjoyable compared to driving that electric car. The relationship between electric car drivers and their cars is like two lovers who decide to part – they know they’re no longer compatible and they have to break up, but they don’t want to. They’re still crazy about each other!”Selling the car back to Renault was not the end of the story. As a journalist, Blum had many questions flooding his mind and he wanted answers.“How could it be that, a month after we put the money down on the car, the CEO of Better Place was fired? How did I not see that? “A month later, the company’s investors made an emergency injection of another $100 million to keep it going, which implies that Better Place didn’t have enough money to continue on without that extra funding. Nearly a billion dollars was invested in total.What was going on internally that would lead to such a swift demise?” Then there was the question of why people weren’t buying the car in the first place.“It seemed like a great idea – we loved it – but Better Place only sold about 1,000 cars in Israel. Why weren’t people rushing to buy it by the tens of thousands? Are we not the early adopters implied by the term ‘Start-up Nation?’”Blum was friendly with some of the staff and investors at Better Place. They introduced him to other employees and before long he had interviewed scores of people, read probably every single article, and watched every video that had ever been made about the company.“I quickly realized that the story is an incredibly interesting one, filled with fascinating characters, both brilliant and flawed. The more I learned, the more I thought that it’s a story that should be told. If I didn’t write it, nobody may have gotten to the bottom of this mystery. I didn’t want that to happen. So I pushed forward and now the book is coming out.”Was there resistance to your investigative work?“Everybody was very cooperative. The only people who didn’t agree to meet with me were the top management – Shai Agassi and some of his top staff. They were concerned that I would tell an unfair, unbalanced story – and they had reason to worry.“There had already been a very tough article about Better Place in the magazine Fast Company that painted the management in a bad light. But I assured them I had no agenda. I only wanted to tell the honest, objective story. Yes, if mistakes were made, I would write about the mistakes. But if good decisions were made, I would write that as well.”In our modern society where so many prominent people seem constantly to be under investigation for misdeeds and moral turpitude, did you discover serious wrongdoing? “Nobody did anything illegal or evil. Everybody wanted the company to succeed. That said, there were a lot of things that got in the way of the company succeeding and I go into great detail in the book about what those things were.”Was the whole Better Place saga nothing more than a near-billion-dollar fiasco or did any good come of it? “Better Place’s manufacturing partner Renault lost money for sure, but they also gained expertise and became more of a competitor in the area of electric vehicles. They took a lot of what they learned and they applied it to the Zoe, a much more sophisticated hi-tech all-electric car. It’s smaller, it’s sportier, the battery lasts longer. Renault learned a lot from the relationship, so I don’t feel that they view it as a huge disaster on their end.“The people who worked at Better Place gained a lot, too. They developed new technology and skills that they were able to take to their next jobs, where they continue to innovate. I’m not saying that they weren’t devastated when the company failed – they were – but the people I spoke to all found jobs, maybe not as ‘save-the-planet revolutionary’ as Better Place, but nobody is unemployed.”Did Better Place ever have a realistic shot at succeeding? Is there a future for electric cars in Israel? “If certain decisions had been made differently, Better Place definitely had a shot at succeeding. It would have been a very different company, but every step along the way gets us closer to where we are going – more economical and cleaner transportation.“One of the things I learned in the process of writing the book is that electric cars are not going to become mass-market until the technology changes in one of two ways. One: Batteries need a lot more range – like 1,000 kilometers – so that you can drive to Eilat and back without having to switch batteries or plug in.“Two: We need a technology that can fully recharge batteries much faster, say in five minutes, essentially the same time that it takes to fill a car with gas. If people knew that they could pull over and plug into a charging spot for just five minutes, then we would see mass-market adoption – assuming the purchase price of the vehicles was competitive.“Unfortunately, no car today – even the new Tesla 3 – has a range of more than 450 kilometers at optimal conditions, meaning you can’t use the heat on a cold day or the air conditioning on a hot one. That is not something that car buyers at this point are willing to accept. That’s why I didn’t buy another electric car right away. I had to worry about range for four years – that was enough.”Is the rise and fall of Better Place merely the story of a specific business, or does it have greater significance? “Good question. I’ll be heading out in November on a speaking tour following the book launch, and it will focus less on what happened to Better Place in particular and more on what can be learned from it. There are universal business lessons that are applicable to entrepreneurs and executives in businesses of all sizes, like ‘When do you stay the course and when do you pivot? How do you make decisions when everything around you is changing? How much can you rely on charisma and personality vs needing to make the hard business decisions?’“All these kinds of issues came up in Better Place, and they are issues that are relevant to any company that raises money in today’s economy. It’s a fascinating and instructive case study that should be taught in business schools around the world.”Maybe one day it will, with Totaled as a textbook.Are electric cars better than gasoline cars?We and our parents and grandparents have been driving gasoline-powered cars for as long as we can remember and, given the continued prevalence of such cars on the road today, it seems like nothing is changing quickly.In order for there to be a major shift to electric cars, people will need to be convinced that electric cars are the better choice. Here are some of the advantages of electric cars over their conventional counterparts:1. NoiseWe are so used to the noise generated by our cars that we tend not to notice it, but for those who care about noise pollution, electric cars are much quieter at all speeds – for passengers inside and pedestrians outside.2. Energy efficiency Electric cars are much more energy efficient. It is estimated that internal combustion engines harness only about 15% of the fuel’s energy potential to move the vehicle and power accessories, whereas electric vehicles, whose significant advantages include regenerative braking and the fact that they do not idle, have on-board efficiency of around 80%.3. Maintenance Electric engines require significantly less servicing than internal combustion engines. They have virtually no liquids – no gasoline, oil or water – and far fewer moving parts. They do not require the many other component parts that demand upkeep and replacement. They don’t have the same kind of transmission that an internal combustion car has, nor do they require changing fan belts, air filters and spark plugs. As a result, they barely need repair. Even the brakes on electric cars last longer due to their unique way of braking, involving reversing the electric motor. Owners enjoy longer warranties, lower maintenance costs and fewer trips for repairs.4. Fuel costConventional car owners pay much more for fuel. According to a study conducted by the University of Michigan Transportation Research Institute, at 2016 energy prices, an average internal combustion car traveling 15,000 miles a year in the US will pay about $1,400 for gas at $2.35 a gallon. An electric car owner driving the same distance will pay about $540 per year to charge it.5. Emissions All of us in places like Jerusalem and Tel Aviv, who sometimes feel choked by car fumes as we walk along congested inner city roads, will be pleased that electric cars have zero emissions – there is no burning of fossil fuels to release as the exhaust fumes of a combustion byproduct. This is not to say that they have no carbon footprint at all, since they are recharged by electricity that is generated by power plants. Still, this generates smaller amounts of pollutants. Ideally, this power would be generated by renewable energy sources, such as solar, wind or hydro.6. Geo-political considerations Weaning ourselves from the fuel pump can significantly diminish the financial and political strength of many of the oil-rich countries whose policies and priorities are frequently not aligned with those of the fuel buyer – in Israel beyond. – Y.F.No going back Imagine the pleasure of owning a car that is peppy, fast, strong, good for the environment, blissfully quiet, easy to maintain, costs very little to run and never needs to stop at a gas station.After owning such a car, would you want to replace it with a conventional, gas-guzzling, internal-combustion car?For Zvi and Debbie Buckman, the answer is an unequivocal “No.”Debbie recalls that they were among the first to buy the Fluence ZE.“I still remember going to this huge Better Place warehouse-turned-showroom where we saw that inspiring video. There was Shai Agassi, larger than life, saying that we can change the world, be a light unto the nations! I walked out of that video and said, ‘Let’s do this!’“We were one of the very first people to put money down, months before the car even came onto the market, in the beginning of January 2012. When we went to get the car, everyone in the place stood up and applauded us! It was one of those experiences that I will never forget.”While the Better Place battery switching stations throughout the country were up and running, the electric car experience was a joy – everything the Buckmans hoped it would be. However, once those stations closed, the ever-diminishing battery capabilities limited their driving range more and more. One night, Debbie ran out of power and was stranded on a dangerous back road on her way home to Beit Shemesh from Jerusalem.Last year, when it had gotten to the point that their fully charged battery could take them only 60 kilometers or less before it was depleted, a well-connected mechanic somehow secured them a replacement battery that gave the car a new lease on life and restored its triple-digit range capability.Renault offered all Fluence ZE owners some NIS 30,000 for their cars last year. Some drivers accepted, took the cash and reverted to gasoline cars. Not the Buckmans. When Renault offered them twice that amount this year on the condition that they buy the new all-electric Renault Zoe, the car company found them willing.Wasn’t their experience with their first electric car traumatic enough to prevent them from buying a second one?“Not at all,” said Zvi. “We loved everything about the electric car experience – except for the range issue; yet with a little resourcefulness, we were able to overcome that.”The Buckmans plugged the car in each night at the charging spot installed at their home in Beit Shemesh, as one would plug in a cellphone. Zvi, who in his profession as a doctor had to do much driving to nearby towns, obtained what is referred to as a “granny cable” (you can plug it in even at Granny’s house, he explains) that enabled him to recharge at any ordinary electric outlet anywhere. He explained that he scouted out and arranged places to plug in the car at most of the places where he parked for work. Therefore, even when the battery was at its weakest point, he could drive the car everywhere he needed to go without being overly concerned that he might run out of power.This solution eliminated the need for battery-switching stations and Better Place charging spots in Zvi’s day-to-day car usage, and the Buckmans report that their monthly fuel expense for the vehicle is a small fraction of what it would cost them to constantly be filling the tank with gas. They miss the Fluence, but find their new Zoe is also a delight to drive. It is smaller (which is fine, as their kids are grown) and nimbler than the Fluence ZE, yet as a hatchback with a folding rear seat, it has more functional modular space. Better yet, it charges faster and delivers a driving range far superior to what their previous car ever did – even at its best.While the Buckmans do own a second car that runs on gas, they insist that they would have bought the Zoe even if it were their only set of wheels.Seeing the pleasure that the Buckmans derive from being an electric car family, and in light of the ongoing improvement in the quality of all-electric cars and their batteries, it doesn’t seem so far-fetched that we will be spotting many more of them on our roads in the near future. – Y.F.
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