Better Place pulls the plug

Electric car service concern files for bankruptcy citing lack of financing and dearth of customers

May 27th, 2013 10:34 am| by admin
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Danes owning cars purchased through Better Place, a company offering battery changing and charging stations for electric cars, have been left wondering what the future will hold for them after the company's global management declared bankruptcy yesterday.

Better Place, which began operating in Denmark in 2009, said it was ceasing all activities, citing a lack of operating capital as the principal reason for the shutdown. The move came after a series investors, including national oil and gas producers DONG, in recent months decided to drop their financial support for Better Place. 

Over the past six months Better Place made a number of cost-cutting measures, including staff reductions. Despite these changes, the company was unable to obtain continued investments.

A receiver has been appointed to dispose of Better Place Denmark's assets. The company said the receiver would work to ensure the best possible outcome for its Danish customers, employees and creditors.

"It is very sad that four years of intense work has come to an end," Johnny Hansen, head of Better Place Denmark, said. "The assumption had been that Better Place Denmark would have access to external financing for another few years before it had to become self-sufficient."

While Better Place customers purchased their cars through the company, the battery remained the property of the company. Renault, which produced the cars sold by Better Place, has assured Better Place's clients that it will continue to honour that agreement.

Hansen said that the company had been working hard to find investors but came up short in the end.

"Given the current situation, our decision to file for bankruptcy is the only responsible to do, " he said.

Denmark was chosen as a test market for the Israel-based Better Place due to its size. Hansen said the company had fulfilled its goal of creating a national network that made it possible to drive electric cars with the same mobility as petrol and diesel vehicles.

The network was completed in late 2012, and Better Place Denmark had about 500 customers. The number was well below its 2010 forecast of the "thousands" of cars it expected to be selling per year by 2010. The company had already downgraded its predictions once, from 500,000 cars on the road in 2020 to "between 20,000 and 100,000". 

"We have to accept that our timing was wrong and that our parent company has been unable to raise the funds needed to ensure the long-term financing of Better Place," said Hansen.

Hansen said that although he still believes in the future of electric cars, he felt the limited number on the road in Denmark made it impossible to run a profitable business servicing them. 

"Innovation takes time and courage, and there are no guarantees when you are challenging a hundred years of transportation behaviour," he said. 

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