Good Energy: The race between Tesla and Better Place

With every major carmaker in the world launching EVs this year and next, could it be that Better Place was just a year ahead of its time and actually on the right track?

By
June 27, 2013 21:50
3 minute read.
BETTER PLACE CEO Evan Thornley (Left)

BETTER PLACE CEO Evan Thornley 370. (photo credit: Courtesy Better Place)

Conventional wisdom places Tesla CEO Elon Musk in the winners circle in the race between the California-based electric- sports-car maker and the now defunct yet much-hyped Israeli electric- car network, Better Place.

Indeed, Tesla recently announced its first quarterly profits, has produced a superior electric car with exceptional range and is the gold standard for the budding EV (electric- vehicle) industry. Musk even paid a US government loan of $465 million in advance by nine years.

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Musk, a self-made PayPal billionaire, gave a personal guarantee to Wells Fargo and US Bank, and he personally injected millions into his once-failing Tesla company at delicate points, preventing it from going under several times. He rescued the company in 2008 when Tesla had only $9 million in cash, the same as Better Place had when it recently failed. (Why didn’t the chairman and the CEO of Better Place step up as Musk did?) As chairman of Solar City (which I personally admire), CEO of Tesla and the man behind Space X, Musk is rightly considered the Steve Jobs of his generation.

So it is more than curious that just as Better Place crashed, Musk last week unveiled a battery swap for the Tesla that looks remarkably like US patents 8,164,300 and 8,006,793 registered by Better Place.

With every major carmaker in the world launching EVs this year and next, could it be that Better Place was just a year ahead of its time and actually on the right track? No and yes. No, because the $850m.

that Better Place raised could have carried the company and dream for many years if they managed the burn better. Yet they are now at the liquidator, so they appear to have lost the race. And so did Israel. Yet the dream of a country run on EVs was correct.

The truth is that the battle between Tesla and Better Place was actually a contest between Musk and the State of Israel, and the State of Israel lost.

But that was just the first lap.

Start-Up Nation can come back strong and take the lead to rid the world of its dependence on oil for transportation, fight climate change and innovate in a range of EV-related technologies, such as longer-range batteries, a nationally managed charge, super-fast charging, batteryswap robots, apps for EVs and more.

The EV business ecosystem is already a multibillion-dollar industry and will continue to grow.

But for Israel to get back into the EV race, the government needs to match the successful determination that the Obama administration demonstrated when the US car industry was set to collapse. Israel, however, does not need to bail out anyone. Instead, the government needs to provide some basic incentives and a horizon to the industry, so that Israel’s natural advantages can propel it to be the leader in the second lap of the EV race.

Prime Minister Binyamin Netanyahu famously declared that he envisions a world without oil, and he launched a visionary program, the Israel Alternative Fuels Initiative.

Yet while the US provided Tesla a significant long-term loan, the Israeli government didn’t put in a single order for an EV for its fleet and actually denied one of its new ministers an EV that was requested. Furthermore, the Israel Tax Authority provided a higher tax break for fleet owners for hybrids than for electric vehicles with swappable batteries. The one major government incentive for EVs – a low 8 percent purchase tax – expires at the end of this year. This is a losing formula.

Before Tesla makes a bid for the Better Place intellectual-property assets to avoid a lawsuit on its battery-swap network, Netanyahu should declare that Israel will nationalize and maintain the network of 2,000 charging spots and a minimum of 10 batteryswap stations, make a fleet commitment of 10% of government and military cars to be EVs and produce a package of tax benefits that makes it worthwhile for industry fleets to lease EVs of all brands. The first step would be to immediately announce an indefinite extension on the 8% purchase tax for EVs and an intention to keep the Better Place assets and remaining jobs in Israel.

After a tough decade of smart work and significant personal investment, Musk has electrified the EV industry with Tesla’s recent success. But he cannot electrify a country to switch to EVs. Only Israel can do that.

Round two is ours to lose.

[email protected]

Yosef I. Abramowitz is advising Israel’s nonprofit EV Driver’s Association to prepare a bid for Better Place’s assets, and he sometimes wears a yellow cape.


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