E-vehicle maker Better Place is switched off for good

A Renault Fluence Z.E. exiting Better Place Battery Switch Station.

Another high-profile electric-vehicle startup company has had the plug pulled. A startup called Better Place had an idea for electric cars with batteries you could swap in and out. Trade in an empty battery for a new one with juice, just like that.

It started off in Israel, as a very cool idea. But the vehicles got an even cooler reception from customers.

Better Place came and went, even though a lot of Americans never heard of it. But in small countries like Israel and Denmark, the company stoked a lot of excitement with a kind of propane gas tank model: Swapping stations are where drivers can get new electric-car batteries on the run.

Here's the problem: Electric vehicles are pricey. So there aren't many swappers.

"The environmental stewardship value proposition hits the heart," says analyst Sandeep Kar of consultancy Frost and Sullivan. "But I believe the sticker shock hits the wallet harder. And that's what was the issue that really brought this company down.

It didn't help that old-school fossil-fuel cars of late have become cheaper to own, as crude oil prices softened in the recession.

Better Place was founded by Shai Agassi, a former software executive known for his boldness. But perhaps he was too brash.

"You can't really go to somebody in the auto business and say 'I am going to decimate your business model,'" says solar entrepreneur and cleantech investor Jigar Shah, of the investment firm Inerjys. "And you can imagine a lot of automakers don't take kindly to people telling them how their cars should work."

It's not just the big automakers. Big Oil's hard to nudge, too. Yes, electric car maker Tesla is growing. But lots of upstarts go under.

"This is more the norm than the exception," observes Seth Fletcher, author of a book on the electric battery, "Bottled Lightning." "These are really bold, risky ideas. And most of them are going to fail. But that's what venture capitalists expect from their investments."

As for electric vehicle skeptics, they're having a field day with demise of Better Place, and of soft sales of electric cars in general.

And now there's a new rival: cheap natural gas can power cars, too. To which Jigar Shah gives the entrepreneur response -- the cup is half full.

"People mocked flat-screen televisions, right?" Shah says. "People mock change. And that's ok, because you know, they're not my first customer."

He predicts the next generation of startups will take up the innovative ideas from Better Place and, perhaps, execute them better.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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