The New Motion

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In a surprising move, Shai Agassi, the founder and Chief Executive of Better Place was removed by the board of the company yesterday, as reported by several media. The company itself also issued a statement on its website. Evan Thornley will replace Shai Agassi as the company's new CEO.

With Shai no longer at the helm of the company, the world is loosing a charismatic leader and big proponent of large-scale EV adoption. While I am skeptical of several aspects of the business model Shai built up with Better Place, he did the world a great deal of good.

Vertical integration, a wise move?

Better Place has been in business since late 2007 and focuses on realizing a network of charging infrastructure and controlling all charging transactions. The EV-game is - apart from producing energy and making cars - a play that centers around rolling out smart infrastructure that charges the cars intelligently, while keeping into account battery degradation and supply and demand of energy.

Better Place's model is one that centers around complete vertical integration to achieve its goals; ranging from the owning of the battery and all infrastructure needed to charge cars to buying the energy needed and completely controlling the way it goes into the car. On top of this, its model even works with replaceable batteries that will accommodate for the shortage of range in current-day electric cars. Just driving past a switch station and taking in a new battery while dropping your depleted one will get you a full fresh charge and an additional 100 to 150 kilometers.

This vertical integration makes Better Place's promise one that's hard to realize. It depends on owning much (if not all) of the infrastructure, both public, semi-public and private (at people's home). Moreover, it relies on owning most (if not all) of the electricity contracts that will facilitate the delivery of energy to cars; again both at home, at the office and at public and semi-public locations. Thirdly, for the switch stations to work, it requires car makers to adapt the car making process to the Better Place model. The switch stations require a standard way of taking out batteries; something most car makers are skeptical about building in. Switch stations are becoming even less realistic now that most car makers are opting to build in technology supporting fast charging of batteries at a speed of up to 100-150 kilometers per 15 minutes.

Slow starter

On top of this, in general the market for electric cars is a slow starter; in cannot be compared to startups in the digital sector where all infrastructure (the internet) to deliver services like Spotify, Facebook and Twitter is already widely available and people have already largely bought into the promise of it. In the EV sector first people will need to buy into the promise of EVs, second infrastructure needs to be rolled out and only then one can begin delivering services like the ones Better Place promises. Furthermore, compared to adoption of mobiles phones, things will move less quick in the EV sector. Even with rising gas prices, the average lifetime of a car is still about 14 years, compared to a lot less for your average computer, laptop or smart phone. People will not throw away their expensive car simply because gas is 10 cents more per liter.

Better Place was and is a heavily funded company; with (according to Crunchbase) at least $686 million in venture funding. Combined with the fact that this sector will not deliver returns on investments made in 12 to 18 months, it wouldn't surprise me if the company's stakeholders decided it was taking too long for the vertically integrated vision of Shai Agassi to become a reality. And so it was time for a new CEO and quite possibly a new strategy.

Lessons learnt

I think in general, people that are after large-scale adoption of electric cars in my opinion need to take into account that large vested interests that are at stake with both corporation in the energy sector as well as the car makers. Working with them and coming up with ways to integrate various parts of the model without having to own all of it is an absolutely necessity to becoming successful.

His next move

I think despite my being skeptical about the model Better Place is pursuing, Shai has been one of the guys that has at least taken a stance and supported it. I think there are only very few people without whom this sector wouldn't be were it is today. Elon Musk is one of them; Carlos Ghosn definitely another. I think we'll learn to appreciate Shai Agassi as being one of these guys as well. On top of that I'm curious to see where he's heading next.

Tags: better place, nieuws