By all accounts, Shai Agassi, the founder and CEO of Better Place, Israel's bankrupt electric car company, is an extremely charismatic man. His charm had politicians, venture capitalists, celebrities and non-automotive industry reporters slobbering over him. Everyone wanted to get their picture taken with the man who would transform Israel's auto industry into the first electric powered industry in the world and transform the start-up nation into the transportation hothouse for the world.
Agassi's vision was simple and easy to understand.
By 2020, half of Israel's cars would be battery powered electric cars supplied by his company, Better Place. We would replace our internal combustion engines, powered by oil produced by our worst enemies, with batteries produced by Better Place. Better Place would overcome the technological deficits of batteries that are only capable of powering a car for short distances by building battery changing stations throughout the country. Instead of filling up our tanks with gas, we would replace our battery.
And our enemies would go bankrupt.
The only ones not convinced by Agassi's plans were people who actually understand the car market generally and the Israeli car market in particular.
Automotive industry reporters warned as early as 2008 that Israeli drivers would need incentives to buy into a new technology. Cars in Israel are prohibitively expensive. The government charges 82 percent customs duties on imported cars. If electric cars could be cheap cars, then they had a chance of succeeding.
To help Better Place succeed, the government gave the company a massive discount on import taxes. Better Place, which signed a deal with Renault to produce a battery-charged model of the Fluence family car, paid only 10% import duties for the car.
Instead of passing the savings off on its customers, Better Place cars cost the same amount as regular gasoline powered cars. And that's not including the cost of the battery or the monthly subscription to Better Place battery charging services.
So there was no economic incentive to buy the car.
Many have chalked the failure of Better Place up to its poor management. And no doubt Agassi's management skills didn't hold a candle to his skill as a salesman. The company's business model was an incoherent study in overreach and hubris.
But the fact remains, the car was too expensive.
And that makes some sense. Building a whole national infrastructure for electric cars is expensive.
Caroline B. Glick is the senior Middle East fellow at the Center for Security Policy in Washington, D.C., and the deputy managing editor of The Jerusalem Post, where this article first appeared.
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