The Israeli electric car company Better Place was a failure, but not a total failure, and we should be careful to learn the right lessons from it, says the Harvard Business Review.
“A blanket dismissal of its effort is a mistake. For entrepreneurs, investors and policy makers, there is plenty to learn from both the strategy and the outcome,” it notes.
The business magazine lauded Better Place for innovating
a comprehensive, affordable drive-anywhere, anytime solution, in contrast to other enterprises which have been limited to developing individual parts of the puzzle — vehicles, batteries or charge spots.
Better Place also demonstrated the technical viability of a switchable battery network deployed along major routes for fast recharching on both short and long distance trips.
A less recognized innovation was the company’s separating of ownership of the battery from ownership and the car, which risk of investing in cars and batteries with diminishing resale value. Instead of buying batteries, Better Place customers would buy subscriptions for miles (just as mobile-phone operators sell subscriptions to minutes). Better Place would then use these multi-year contracts to finance its infrastructure investments and battery depreciation.
Nevertheless, notwithstanding all its good ideas, Better Place collapsed. The reasons is not not so simple as a failure to sell cars.
While it is true that by May 2013 it had sold fewer than 3,000 vehicles, in the small Israeli market, its Renault Fluence ZE model was outselling Toyota’s category leading Prius, and customer-satisfaction was unusually high.
The deeper answer is that time ran out before its operations were sufficiently established and profit-making. Navigating institutional hurdles such as zoning rules and insurance slowed the marketing. In addition, time was lost in wasteful efforts to get toeholds and run pilots in too many places. Better Place was already off to Australia, the Netherlands, California, Hawaii, Japan, China and Canada before its two core markets, Israel and Denmark, had been secured. This entrepeneurial overreach burned up limited resources in money, management attention, and, the patience of its partners, especially Renault.
In early May, Renault announced its death-blow of no confidence in Better Place. It decided to scale back its commitment to switchable battery cars, and the long-awaited second model, the Zoe compact that Better Place had counted on to complement the mid-sized Fluence, would not be coming after all.
In many ways, Better Place was actually a success, both technologically and in aligning the interests of the pivotal players in the electric-car ecosystem. Its failure lies in its own discipline and execution.
“Entrepreneurs, investors, and policymakers should distinguish between the drivers of the failure and the elements that carry the seeds of [someone else’s] future success,” the article concludes.