Better Place

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debate about how Better Place can make their grand vision a reality in the future by ... dependency on oil to reliance on environmentally friendly, renewable energy. ... graduation from Technion - Israel Institute of Technology, Shai Agassi ...
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Better Place Transforming the global auto industry? Nikolas Bakke Jan Lindhøj Morten Rask Department of Business Administration, Business and Social Sciences, Aarhus University, Denmark

Better Place is trying to reshape the automotive industry by shifting transportation from a dependency on oil to a reliance on environmentally friendly renewable energy. Better Place is developing an extensive infrastructure system that will utilize overcapacity in the production of wind power among others and that will drive the global transportation industry to becoming driven by electric vehicles (EVs). Better Place does this by selling its customers “mileage” and a car without a battery. The case highlights the internationalization process of Better Place from an international business perspective in order to encourage a discussion and debate about how Better Place can make their grand vision a reality in the future by overcoming the obstacles that historically have been challenging the rise of the EV industry. The case includes a historical background of the EV industry by using Denmark as an example due to Denmark’s favorable drivers of making it a test market for proving the concept of a suitable business model and concept for the future global EV industry.

This case is intended as a starting point for class discussions rather than an illustration of the handling of a management situation be it effective or ineffective. The case was compiled from published sources. © 2012 by Nikolas Bakke, Jan Lindhøj & Morten Rask. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owners.

 

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812-038-1 1. Introduction Better Place is trying to reshape the automotive industry by shifting transportation from dependency on oil to reliance on environmentally friendly, renewable energy. Better Place is developing an extensive infrastructure that will utilize surplus wind power capacity, among others, aiming to transform the global transportation industry to become driven by electric vehicles (EVs). The modern transportation system and infrastructure are currently not geared towards EVs, but Better Place is searching to overcome the barriers by introducing a new infrastructure consisting of quick-and-drop battery switch stations: In this way the Better Place solution and business model address the anxiety range that historically has kept consumers from using EVs. The Better Place vision is to make the world a truly “better place” by making it independent of oil which is fuelled by provoking and conducting a paradigm shift in the personal transportation business model. However, several competitors and established automotive manufacturers are challenged by the notion of developing the new global standard of tomorrow, because developing the new industry game changer holds an unimaginable growth potential. Better Place does this by selling “mileage” and a car with a battery similar to SIM cards as known from telecommunication rather than selling traditional products in the form of cars and gasoline. 2. The Creation of Better Place and its Network The Shai Agassi white paper (2007) describes the idea of Better Place as “getting rid of oil” because the world depends too much on oil as the general energy source. Throughout the history of the car and post-industrial revolution transportation, oil has prevailed as the single most important energy source. The massive oil consumption draws heavily on the environment, and as a result the concept of “global warming” is the object of much debate. In the past various solutions on how to solve the pressing issue, including fossil fuel and hydrogen, have been proposed, but unfortunately few of these proposals have proved successful for various reasons. Lately the focus has been on EVs, because changes in central market drivers have produced a favorable situation for EVs compared to other solutions (Agassi, 2007).

 

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812-038-1 Another important and emerging driver for EVs is the increased global focus on sustainability. A sustainability and green business model for transportation is in sharp contrast to the black and polluting business models. Thus green business models and EVs are “the new black” in transportation if companies want to create legitimacy with external stakeholders such as consumers, the governments and international organizations. However, the issue with many new and innovative green business models is that they are different from what consumers are used to and thus there is a challenge in communicating the “story” to get consumers to accept the new business models. Consequently, actors in the emerging EV industry need to communicate their message and concept in the quest for creating legitimacy and to gain stakeholder buy-in, which is necessary in order to get rid of oil (Agassi, 2007). At the company launch in 2007 the vision was worded as follows: “Project Better Place seeks to reduce our global dependency on oil through the creation of a market-based transportation infrastructure that supports electric vehicles, providing consumers with a cleaner, sustainable, personal transportation alternative. As an implementer and operator of Electric Recharge Grids, it has identified a fundamental shift in vehicle economics, making electric vehicles cheaper and cleaner to own and operate. Project Better Place has created a business model that defines the path toward connecting technology, financial, policy and government players through the deployment of an electric vehicle charging infrastructure that benefits component providers, financial institutions, car makers, governments and consumers. The company executed a term sheet with investors that is subject to customary closing conditions. As a matter of policy, Project Better Place will not disclose countries or car makers until they announce their own intent.” (Better Place, 2007) According to Roth (2008) the creation of Better Place can be accredited to Shai Agassi, but it was incidental events that facilitated Agassi’s epiphany to found Better Place. Upon graduation from Technion - Israel Institute of Technology, Shai Agassi founded his own software company. As a result of Israel’s high density of scientists and engineers and Agassi’s entrepreneurial skills, the company quickly became a leading enterprise portal vendor. Agassi’s entrepreneurial spirit was evident, but that Agassi could be a game-changer within environmental issues was not in the cards, yet. When SAP acquired the company for $400 million in 2001, Agassi became a SAP executive. In the following years Agassi worked his

 

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812-038-1 way up and it was widely presumed that he would become the next CEO due to his often drastic and visionary ideas. In the meantime, Agassi gained more and more influence and was recognized as a leader of tomorrow. After joining the forum for Young Global Leaders in 2005, Agassi took interest in the environment and climate changes after an introduction seminar where the theme was “how to make the world a Better Place”. As a consequence of his increasing interest and besides doing his day job at SAP, Agassi began to consort with energy experts to learn everything he could about energy sources, policies and economy. Agassi identified oil dependence as a key issue and quickly identified transportation as the optimal vehicle for change. The problem, in Agassi’s opinion, was oil-consuming, CO2-polluting internal combustion engine-driven cars and the obvious solution was to get rid of them. Half-hearted solutions were not enough: the solution had to be comprehensive and not just a substitute to hybrids or flex fuels. Agassi saw the future in electric cars. Therefore, Agassi did not want to add "range extenders" or gas engines in EVs to take over when batteries died, as this would make EVs more expensive and furthermore not end oil dependency. However, as Agassi realized, EV batteries constitute a major obstacle by being heavy, expensive, of a limited range, and with a long charge time. Thus, Agassi intended to use existing technologies in order to realize the project, but competition with regular cars required innovations in EVs, as a 300-mile range in a regular car can be obtained by five-minutes gas fill-up. Hence, Agassi’s vision to overcome the above obstacles included a holistic strategy. Firstly, Agassi decided to re-bundle the offering not charging for the battery. Furthermore, Agassi proposed the Electric Recharge Grid Operator (ERGO) concept to replace the traditional automotive ecosystem. This would include the introduction of a wide-ranging network of "smart" charge spots providing electricity to replace gas stations. Battery exchange stations would provide snappy battery swapping when lengthy recharging would be difficult. These facilities would be designed in the lines of a car-wash, where a hydraulic lift automatically swaps the depleted battery with a new one. As ERGO owns the batteries, consumers would not be charged for these services. Secondly, to increase the incentive to purchase an EV, Agassi proposed a model inspired by the mobile phone industry, where revenues would derive

 

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812-038-1 from selling electricity – equivalent to minutes. The operator selling the car is thus incentivized to offer steep discounts to generate sales of electricity. Consumers would thus be able to recharge at their convenience at home, work or another place (in the ERGO network). At the same time, drivers would be able to choose from different subscription packages matching individual needs ranging from unlimited miles, a limited number of monthly miles, or a consumption-based package. All these alternatives would be priced at a lower cost than the corresponding one for gas. Agassi shared this vision for the first time in December 2006 at a Middle East Policy convention in Washington DC. Thus, as it required neither technological breakthroughs nor inventions, it took some initiating countries to capitalize on the immense opportunities. A few months later, Agassi quit his job at SAP and in May 2007 he launched Better Place, the first global electric-car grid operator. As regards employees, many of Agassi's colleagues from SAP joined him as Better Place essentially was a software company and due to its visionary perspectives (Roth, 2008). The expertise Agassi required included skills in developing an integrated operating system for the prototype car. 3. Test sites and deployment projects To get the Better Place project going, Agassi needed sites (beta countries) for testing vehicles in conjunction with power grids and charging stations and for developing an operating system to support the vehicle to transportation grid communication. In addition Agassi had to find investors, electric grid network partners as well as development and production partners. Whether consumers wanted indeed to change and whether the model would work in reality were uncertain. Instead Better Place opted for collaboration with national governments that were willing to provide tax incentives for consumers and the partners working with Better Place; furthermore they went looking for funds for setting up the grid and attractive local energy providers.

 

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812-038-1 As the aim was to establish a network, a more comprehensive initial base was inferred to maximize the effect and possible level of consumer adoption. Furthermore, due to the vehicles’ limited range, small geographical “islands” would be preferred. Thus, Better Place first entered into an agreements in Israel, where R&D activities and testing would take place (Better Place, 2008e). Furthermore, agreements were set up in Denmark (Better Place, 2008c), Australia (Better Place, 2008b), the states of California (Better Place, 2008a) and Hawaii (Better Place, 2008d), and the Ontario province in Canada (Better Place, 2009b). In addition, a deployment project in Japan related to taxis was initiated (Better Place, 2009c) and a partnership was set up with the Chinese automotive producer Chery (Better Place, 2010b). Most of these agreements was also financial agreements in the sense that local partners like DONG Energy in Denmark and AGL in Australia promised to invest in the local EV infrastructure (Better Place, 2008b, 2009d). 4. Investors Global investors and partners were drawn by the project and joined the movement with the intention of facilitating a breakthrough for EVs. Initially, with a view to financing the venture, Agassi contacted one of Israel's richest men, Idan Ofer (Roth 2008). Ofer was concurrently investing in a joint venture with Chery Automobile, a large Chinese car manufacturer. Better Place’s global scale was perceived as highly compatible with the Chery investment and a possible synergy enabler as Chery could build cars for the power grid created. Recognizing the project’s potential, Ofer committed an initial amount of USD100m to the project as well as USD 30m, which would be released at a later stage. In addition, Agassi raised another USD 70m in the first round of financing from a diverse group of venture capital funds and investment banks. In 2010, a second round of capital funding led by HSBC saw Better Place gather USD 350m based on a valuation of USD 1.25b (Better Place, 2010a). Finally, in 2011 USD 200m were raised through a Series C equity financing, which facilitated a doubling of the valuation of Better Place to USD 2.25b. Thus, since its birth in 2007 Better Place had raised more than USD 750m (Better Place, 2011c).

 

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812-038-1 5. Partnership with Renault-Nissan The Better Place-Renault partnership is very well summarized by Carlos Ghosn, the RenaultNissan Alliance CEO in a Q&A piece from Wired.com (Squatriglia, 2011): Wired.com: How important is Better Place to your zero-emissions strategy? Ghosn: It is important because Israel has been among the first countries to adopt very significant and aggressive measures to support electric vehicles. Shimon Peres contacted me in 2007 and said, “My dream is to have electric cars everywhere in Israel. I know you are developing the technology. What does it take? Tell me what you want, and discuss it with [Better Place founder] Shai Agassi.” All of the experiences we’ve had have been very positive. We’re very optimistic about the development of electric cars in Israel. That’s going to help a lot in countries like Denmark that are working with Better Place. Wired.com: Why not adopt swappable batteries in models beyond the Renault Fluence ZE you’ve developed for Israel? Carlos Ghosn: We want to make sure we develop different technologies and see what the market ends up selecting. In the case of Israel, the swap system has been adopted because Israel has agreed to make the investment necessary to install the battery swapping stations. It’s a significant investment, and the Israelis are willing to make it. Originally Shai Agassi met with the CEO of one of the largest automobile manufacturers in the world – i.e. Renault-Nissan – at the 2007 World Economic Forum in Davos (Roth, 2008). Renault-Nissan was looking for ways to differentiate itself from competitors such as the Toyota Prius in the green segment. Thus, Better Place provided an optimal way of leapfrogging competitors, as the extensive infrastructure surrounding the vehicle would enable first-mover advantages. Once the investment was in place, shortly after in 2008 Renault-Nissan and Project Better Place communicated their intention to mass-produce EVs with the aim of fostering an EV breakthrough, starting in Israel (Better Place, 2008f). In September 15, 2009 at the Frankfurt Motor Show, Better Place showed the first Switchable Battery EV from Renault (Better Place, 2009a);they also introduced the world to their common commitment to a volume of 100,000 Fluence ZE in Israel and Denmark (Better

 

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812-038-1 Place, 2009e) officially to be launched in March 2011 (Better Place, 2011b) and in May 2011 in Australia (Better Place, 2011f). 6. Developing Software As Agassi brought several former SAP employees with him to Better Place, the competencies to develop the operating system was already in-house. Thus, Better Place quickly developed AutOS, a system serving as an energy monitor, GPS unit, help center, and personal assistant, packed into an onboard computer (Roth, 2008). Its name was later changed to OSCAR. It enables Better Place to manage simultaneous charging of many electric cars at the same time preventing overload of the electrical grid. This, however, means that the EV has to have the software in order to use the Better Place infrastructure. 7. Green business models Agassi’s motivation and a central issue is to make the world a “better place” by getting rid of oil dependency (Agassi, 2007; Roth, 2008). This argumentation reveals that Better Place is based on a vision of sustainability, and integrating sustainability into the business model to create legitimacy is thus the key to success and to convince stakeholders that 1) there is an issue that needs to be solved and 2) the Better Place business model offerings make this possible. In this sense it has been a major challenge for Agassi and Better Place to deliver sustainable values. A company’s Value Proposition describes the way it differentiates itself from its competitors and is the reason why customers buy from a certain firm rather than from another (Osterwalder, Pigneur, & Clark, 2010). In the case of the Better Place offerings, sustainability and convenience are the evident central value propositions. Sustainability appears to be the most important value proposition of Better Place, because sustainability is directly related to the general understanding of the attributes related to EVs.   This is evident in the way Better Place chooses partners that share their views on reduction of pollution and eco-friendly solutions, such as DONG Energy and AGL Energy. Furthermore, in the case of Better Place, stakeholders are very important because they generate financial funding, which Better Place clearly needs to maintain and develop their business by increasing their legitimacy, among other things (Better Place, 2011a). Better Place creates value for their customers, because it revolves around their striving to realize major improvements in the green car industry through new technology and innovative solutions.

 

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812-038-1 This is evident in the new technology and solutions that have been developed in an endeavour to overcome obstacles encountered in the process so far. An example of such innovative solutions is the quick-and-drop station change that depends on advanced robotics technology (Better Place, 2011d), and the way Better Place plans to deploy the recharging systems in their customers’ homes (Roth, 2008). In other words, the technology aspect is perceived to be a major part within Better Place’s business model and it is central in delivering sustainable value. 8. Strategic drivers The EV industry is highly volatile and as history shows new solutions, disrupting technologies and government policies concurrently provide both threats and opportunities. As a consequence the situation of Better Place and other actors in the industry is ever-changing, triggering companies to take strategic actions. During its short lifetime, Better Place has been forced to make several strategic decisions that vary in degree of success especially in relation to partners and markets. Both internal and external drivers have influenced the decision outcomes. In Agassi’s white paper (2007), he claims that the world’s dependence on oil is unsustainable in the long run. He argues that the financial implication emanating from being dependent on oil would be reduced by inventing and distributing EVs. This will also lead to a more sustainable climate. Additionally, Agassi argues that macroeconomics and geo-political implications motivated him to found Better Place. All of these are external factors. Agassi argues that the external need of becoming independent on oil will stimulate private companies to start businesses with the purpose of ending the problem of oil-dependency. To put it in a different way, it is possible to gain first mover advantages by starting a company like Better Place. This certainly is an internal argument for founding a company like Better Place as fast as possible. However, Agassi believes that it does not matter which company wins or loses the battle of creating a company that ends the dependence on oil. The important thing is that the entire environment wins, which is the main motivation for starting Better Place and not the company’s profitability (Better Place, 2007). This thus indicates that motivation is thriving on purely external factors and not on internal cost efficiency. However, the internationalization process of Better Place cannot be explained merely by external drivers but by factors within the company itself as well. There is a clear internal tendency in the way that

 

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812-038-1 Better Place develops its company. External resources and skills are tools that Better Place uses to develop its internal business and to gain strong positions in its markets. On the other hand, as the Better Place business model requires cooperation with an external partner in the various markets, this can be seen as an external factor that drives the green business model, which is why the assumption that Better Place is driven only by external factors is not correct; it is, however, the main driver. The key activities at Better Place thrive on external factors as they hinge on the choice of external markets. Thus, most of Better Place’s key activities take place outside the company, and are coordinated by partners and other counterparts. However, some of the activities are based on R&D, which is an internal process of gaining knowledge. Therefore, the key activities of Better Place do not only thrive on external factors; they are also related to the internal process. Thus the key activities are linked to external markets, they provide internal knowledge. The key resources in the business model also thrive on internal as well as external factors. This is because, as mentioned earlier, Agassi himself is one of the most important resources in Better Place. Thus, sometimes the CEO is the internal driver of internationalization due to his experience. On the other hand, it is Agassi’s broad international network which makes him valuable and which enables him to act as a facilitator between Better Place and the external environment. So you might argue that the external network is enabled by its internal resource, viz. Agassi. This is very closely related to the key partners in the business model. The partners are a significant factor in relation to the whole operation of Better Place. Almost everything Better Place does, it does together with its partners. It is also the external partners who provide Better Place with the important resource of capital. Especially important drivers for the Better Place internationalization process are unique technology and growth goals. Better Place has a vision about growth and challenging existing transportation (Agassi, 2007). This desire for growth drives Better Place to internationalize because their vision cannot be realised without expanding abroad. Better Place has a unique technology and they consider themselves as the global leading provider of electric car networks (Better Place, 2011c). Such a self-understanding of the company and its products is a strong driver for international expansion and for serving markets better than emerging competitors.

 

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812-038-1 9. The internationalization process Establishing and developing the new world standard for EVs and green transportation is a very ambitious vision, especially when taking legitimacy issues across borders into account. Replacing/improving the existing oil-based transport industry and making the world ready for EVs is very resource demanding. Thus, a successful project outcome is highly dependent on external stakeholders due to the required financial resources, infrastructure, technology development, mass production. Better Place must focus globally/internationally in order to fulfill their vision of developing a global standard. However, expansion on a global scale is not a straightforward and easy task as complex considerations in relation to international market selection, entry mode and international market expansion are influenced by both internal and external drivers. The company’s entry into new markets was very rapid at the beginning mainly taking place by establishing partnerships in the form of strategic alliances and joint ventures (see table 2). Scrutinizing the initial markets, two main patterns are evident 1) partners are present in most markets; 2) there is a weak correlation between internal and external drivers across the markets and thus market selection is related to the availability of partners in the diversified markets. As regards recent activities, Better Place has a more concentric contracted focus on fewer markets, where currently they have only launched/are launching their product in Denmark, Australia, and Israel despite having entered many countries. At this time Better Place’s strategy for the markets entered without announcing launching dates for the mass market release of the concept is unclear.

9.1 Discussion of actual markets Despite having entered several markets, as seen in table 1, Better Place themselves state that currently they have only three markets where they plan to make a strategic roll-out of their concept. These countries are Denmark, Israel, and Australia (Better Place, 2011c). In 2008, Better Place entered Israel using FDI as the entry mode using the company capital to establish their activities (Better Place, 2008e). Besides launching the concept, Better Place has also concentrated its internal R&D activities in Israel through a wholly owned subsidiary. Large volumes of renewable solar power energy were already in place in Israel, which were compatible with the company’s visions. Better Place projected sales of 100,000 EVs in Israel and Denmark by 2011 (Better Place, 2009e). This figure, however, has not been reached yet

 

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812-038-1 even though Better Place registered over one million electric kilometers in the first part of 2012 (Better Place, 2012b). In January 2009 Better Place and Dong Energy made an agreement to invest in an electric car network in Denmark (Better Place, 2009d). Denmark-based DONG Energy is one of the leading energy groups in Northern Europe. Dong Energy’s business is based on procuring, producing, distributing and trading in energy and related products in Northern Europe. In 2011 Dong Energy generated a revenue of DKK 57b (EUR 7.6b) and they have app. 6,400 employees (www.dongenergy.com). DONG Energy’s long-term vision is to provide clean and reliable energy. Accordingly DONG Energy has developed what they call the “85/15 strategy” in order to fulfill their vision. DONG describes their 85/15 strategy in the following way: “Today, 85 percent of DONG Energy’s heat and power is produced by fossil fuels. Now we have set ourselves a goal: Over the next 30 years we will reduce CO2 emissions per produced kWh to 15 percent of current levels. We handle the greatest reduction first. Within the next 10 years we will half the CO2 emissions per kWh produced”. The strategy includes a focus on less coal, more wind and natural gas to make the journey reliable (www.dongenergy.com). According to Vestergaard (2012), Dong Energy has invested DKK 200m for a 17.5% stake in the Danish based Better Place venture; the partnership in Denmark is thus equity based and the entry mode can be classified as a joint venture (Better Place, 2009d). In October 2008 Better Place announced their agreements with AGL Energy and Macquarie Capital Group to enter the Australian market (Better Place, 2008b). According to their homepage AGL Energy is “Australia's leading renewable energy company and is Australia's largest private owner, operator and developer of renewable generation assets. AGL is taking action towards creating a sustainable energy future for our investors, communities and customers”. AGL Energy’s renewable energy activities include solar energy, wind farms, biogas, biomass, landfill gas, and hydroelectricity (www.agl.com.au). According to Macquarie Capital Groups’ homepage the company is ”a global provider of banking, financial, advisory, investment and funds management services” and “Macquarie's main business focus is making returns by providing a diversified range of services to clients. Macquarie acts on behalf of institutional, corporate and retail clients and counterparties around the world. We have expertise in specific industries, including resources and

 

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812-038-1 commodities,

energy,

financial

institutions,

infrastructure

and

real

estate”

(www.macquarie.com). The agreement with AGL Energy is an equity based joint venture and the agreement with Macquarie Capital Group is made to procure financing in Australia (Better Place, June 1, 2011). Table 1. Overview of Entry Modes Actual Market

Entry Date

Entry Mode

Israel

March 2008

FDI

-

Partner

Wholly

owned subsidiary Denmark

March 2008

Joint Venture

Australia

October 2008

Joint

Dong Energy

Venture, AGL Energy, Macquarie

Strategic Alliance

Capital Group (Australia)

Source: Press releases (Better Place, 2008b, 2008c, 2008e)

9.2 Future market expansion Within the first 16 months of existence Better Place entered three markets, as shown in table 2. Better Place initially followed a diversification strategy. It could be argued that this is a rapid expansion, especially when considering that the EV market constitutes a premature market. In recent years it seems that a more concentrated strategy has been followed, because Better Place has not announced a new launch in a market since Australia in October 2008 (Better Place, 2008b). This might imply that Better Place wants to focus on obtaining a stronger position on their current markets before entering new ones – i.e. they have shifted their strategy from diversification to concentration. This seems to be the case as illustrated in the following table where we see that at the beginning Better Place’s press releases address many geographic business locations whereas later they seem to focus specifically on Israel, Denmark and Australia.

 

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812-038-1 Table 2. Country in focus in Better Place's Global Press Releases 2007-2012 Israel  X  X  X 

Denmark 

France 

Australia 

US

Japan

Canada

China

Holland 

X  X X  X X X X X  X  X  X X  X  X X  X  X  X  X  X  X  X X X X X X X X X  X X  X X  X X X  X  X  X  X  X  X X X  X 

As regards future expansion into new markets, Better Place has been looking at European countries such as the Netherlands and France, and this is mainly based on their existing

 

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812-038-1 partnership with Renault in France. Also Better Place is planning to establish a European headquarters in France in order to be close to the European market and Renault. The purpose of the headquarters is further to develop the relationship with partners and institutions in Europe in order to develop and mature the EV industry in Europe (Better Place, 2011c). 10. Current and future challenges If Better Place succeeds, it will gain a powerful position in an estimated multi-trillion dollar market. However, in order to realize the potential, convincing consumers is the key in the years to come. The stigmas of the past EVs being slow, impractical and with a limited range constitute beliefs which need to be proved unfounded. Better Place continuously focuses on improving these product features. However, launch and projection delays can be dangerous as this may affect consumers’ trust in the project. In relation to this, in May 2012 Better Place Israel delivered 110 cars to new customers, at a speed far slower than projected (Better Place, 2012b). The Better Place model may give rise to the question as to whether a monopoly is being created, if the Better Place model becomes the standard. This is arguably an issue in the case of Ireland, where the local government opposed a model in which one player would control an entire infrastructure. Openness in the system is required, as this will allow other actors to provide input in terms of batteries, charging stations and electricity (Martini, 2009). Better Place Denmark executives are expecting competitors to have the same offerings, so competitive packages will be a must to survive (Martini & Gaarden, 2009). In addition, on the Danish arena the competing actors are discussing how to enable roaming, so consumers can use all charging stations regardless of subscription. As regards market expansion Better Place intend to concentrate on existing key markets as well as to expand in Western Europe, where a newly opened office in Paris will constitute the new European headquarters which it will use as “a base for attracting talent, investors, and partners” (Better Place, 2011c). In addition, new deployment projects are initiated, e.g. in the Netherlands, where EV airport taxis are deployed in Amsterdam (Better Place, 2012c). Changes towards electricity as the power source for cars are needed due to depleting oil reserves, crude oil price fluctuations as well as environment concerns as regards CO2

 

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812-038-1 emission. Many governments have realized this increasingly investing in greener cars and in alternative and clean energy source development. Furthermore, as the costs of electricity from renewable sources are becoming easier to predict, this may positively influence the market for EVs using renewable energy. However, the energy situation in different country contexts is rather diverse. In France, the main source of energy is nuclear plants, whereas Germany is increasing its commitment to wind energy. However, Europe consisting of one large common energy grid provides opportunities for Better Place, as this allows for integrated solutions. By offering an integrated infrastructure, consumers may perceive the Better Place model as more convenient as opposed to the traditional way of operating, servicing and gas fueling. Battery swapping is under constant improvement, and today’s five-minute battery swap time in the Fluence Z.E. model may be further reduced. By entering the EASYBAT project, which is backed the EU Commission, Better Place takes part in the development of the next generation of commercial battery swap solutions (Better Place, 2011e). The solutions are intended to accommodate different kind of batteries, not just Better Place batteries. As small countries, islands and urban areas were the initial target, it may be questioned whether the same scale can be achieved in large countries, as establishing a comprehensive network may be a problematic undertaking implying high risks and uncertain ROIs seeing that it requires support and cooperation from several stakeholders to succeed. Moreover, as the propensity of renewable energy in many regions is rather low key stakeholders may demand changes that cannot be met as changing existing infrastructures often is a cumbersome process. Thus, a main legitimacy issue may be that non-green energy sources are used to provide energy for the charging stations. In this case Better Place is mitigating the dependency on oil, but is not necessarily providing a green alternative, which may keep consumers from choosing the EV alternative. The estimated growth for EVs is likely to attract an increasing degree of players. At the moment, many actors in the EV industry regard Denmark as the key test market for the development of EVs attracting a number of global actors (Rask, Andersen, Linneberg, & Christensen, 2009). As a consequence, other viable competitive solutions have emerged and the actors are now rolling out pilot projects in Denmark but also in other test markets. Better

 

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812-038-1 Place’s main driver for differentiation relates to its holistic approach offering an integrated solution where a network grid is the key. Other main competitors include, e.g., Build Your Dreams, a Chinese manufacturer of EVs, as well as Clever, which are a system operators as Better Place. One major barrier to fast adoption of EVs relates to the traditional auto industry, which is threatened by the EV invasion in several areas. Effects of globalization include the interconnectedness of industries and job markets. As a consequence, political aspects need to be strategically considered in terms of barriers for market expansion, but also in terms of consumer adoption. Therefore large net vehicle exporting countries may lose jobs due to a lower demand for traditional cars. In Germany, for example, up to 25 per cent of the workforce is directly or indirectly related to the auto industry. The question remains: how will Better Place overcome these challenges and utilize the opportunities to secure a transformation of the auto industry? Will new markets be targeted? Are there new segments to serve, new ways to supply offerings or alternative ways of gaining an advantage for Better Place to sustain? AND what will be the next chapter in the life of Better Place? It will be with a new leader while the Better Place Australia CEO Evan Thornley, replaces Better Place Founder & CEO Shai Agassi that steps into Board Role: “Four years ago, Shai asked me to join the Better Place mission and bring it to Australia. It has been my pleasure to lead that effort along with my colleague CEOs in Israel, Denmark and now the Netherlands. Today, it is an honour for me to step up and lead this fantastic global team on a day-to-day basis,” said Evan Thornley, CEO of Better Place. “We have the only fully integrated charge network platform in the world that’s live and operating and serving satisfied customers. We start the second chapter with a tremendous strength of global investors and management team. Our relentless focus now is to grow and satisfy a global customer base and build powerful industry partnerships.” “Five years ago, I followed my passion to make the world a better place and founded a company to materialize that vision. Very few people are blessed to see such a grand vision become a proven reality within a relatively short time frame,” said Agassi. “I am proud of the Better Place people and the team that I am leaving behind who will take this company to the next chapter.” (Better Place, 2012a)

 

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812-038-1 References Agassi, S. (2007, October 5). Projecting The Future Of Energy, Transportation, And Environment. Retrieved Feruary, 2009, from http://www.betterplace.com Better Place. (2007, October 27). Shai Agassi Launches Alternative Transportation Venture. Retrieved August, 2009, from http://www.betterplace.com Better Place. (2008a, November 20). 21st Century Initiative in California Defines Roadmap for Sustainable Transportation, Green Job Growth and Opportunity to Reinvigorate Region’s Competitive Advantage - Better Place Announces Support of California Governor's and SF Bay Area Mayors' Commitments to Build Sustainable Transportation Infrastructure. Retrieved 2009, August, from http://www.betterplace.com

Better Place. (2008b, October 22). Better Place Partners With AGL and Macquarie to Build EV Infrastructure in Australia - Will Raise up to $1 Billion AUD to Fund Initial Network Build Out. Retrieved 2009, August, from http://www.betterplace.com Better Place. (2008c, March 27). DONG Energy and California-based Project Better Place to introduce environmentally friendly electric vehicles in Denmark. Retrieved August, 2009, from http://www.betterplace.com Better Place. (2008d, December 2). Governor Lingle and Better Place Announce Partnership to Offer National Blueprint for Clean Energy in Transportation - Hawaiian Electric and Better Place Sign Agreement to Power Electric Vehicles with Renewable Energy. Retrieved 2009, August, from http://www.betterplace.com Better Place. (2008e, March 11). Project Better Place Appoints Israel CEO, Declares Israel as Primary R&D Center. Retrieved 2009, August, from http://www.betterplace.com Better Place. (2008f, January 21). Renault-Nissan and Project Better Place prepare for first mass produced electric vehicles. Retrieved 2009, August, from http://www.betterplace.com

Better Place. (2009a, September 15). Better Place Debuts EV Services Platform at Frankfurt Motor Show • Names Additional Ecosystem Players for Scaling Up Production • On Track for Global Deployment Plans - Including First Switchable Battery EV from Renault. Retrieved 2009, September, from http://www.betterplace.com Better Place. (2009b, January 15). Better Place Partners with Ontario to Bring ‘Car 2.0’ Electric Car Infrastructure to Canada. Retrieved 2009, August, from http://www.betterplace.com

Better Place. (2009c, August 26). Better Place Targets Tokyo Taxis for Battery Switch Application: Wins Electric Taxi Project from Japan’s Ministry of Economy, Trade, and Industry. Retrieved 2009, August, from http://www.betterplace.com Better Place. (2009d, January 27). Better Place, Dong Energy Close 103M Euro (770M Danish Kroner) Investment for Denmark Electric Car Network. Retrieved 2009, January 27, from http://www.betterplace.com Better Place. (2009e, September 15). Renault and Better Place commit to volume of 100,000 Fluence ZE in Israel and Denmark - Renault and Better Place announced today a new, expanded agreement for Renault’s first passenger electric vehicle, Fluence ZE. Retrieved 2009, September, from http://www.betterplace.com Better Place. (2010a, January 24). Better Place Secures $350 Million Series B Round led by HSBC Group - Deal Marks One of the Largest Clean Tech Investments in History With Valuation of $1.25 Billion. Retrieved 2010, June, from http://www.betterplace.com

Better Place. (2010b, April 23). Better Place Takes First Step in China - Better Place, Chery Automobile Sign Collaboration MOU for

 

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812-038-1 Prototype Switchable Battery Electric Vehicles.

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Better Place. (2011a, June 1). ActewAGL and Better Place Sign Landmark $60m Deal on Renewable Energy Retrieved 2011, August, from http://www.betterplace.com Better Place. (2011b, May 15). Better Place introduces the first mass – market alternative to the conventional car, the Renault Fluence Z.E., together with membership packages that offer Israeli drivers up to 20 percent savings Retrieved 2011, August, from http://www.betterplace.com

Better Place. (2011c, November 11). Better Place Raises $200 Million Series C Financing. Retrieved 2011, November, from http://www.betterplace.com Better Place. (2011d, March 23). Better Place Unveils Network Deployment Roadmap for Israel, Offering Electric Car Drivers Complete Nationwide Coverage by End of Year. Retrieved 2011, August, from http://www.betterplace.com Better Place. (2011e, March 2). European Commission Backs First Project for Battery Switch - Industry Leaders Better Place, Continental, Renault Form “EASYBAT” Consortium with Ernst & Young, TÜVRheinland, KEMA and Leading Research Institute. Retrieved 2011, August, from http://www.betterplace.com Better Place. (2011f, June 20). Renault and Better Place Partner in Australia to Launch First 'Unlimited Range' EV, the Fluence Z.E. in 2012. Retrieved 2011, August, from http://www.betterplace.com/

Better Place. (2012a, October 2). Better Place Australia CEO Evan Thornley Named Global Chief Executive Officer - Better Place Founder & CEO Shai Agassi Steps into Board Role. Retrieved 2012, November, from http://betterplace.com Better Place. (2012b, May 30). Better Place Logs One Million Electric Kilometers. Retrieved 2012, August, from http://www.betterplace.com Better Place. (2012c, March 12). Better Place to Open Battery Switch Station at Amsterdam Airport Schiphol. Retrieved 2012, August, from http://www.betterplace.com Martini, J. (2009, February 2). Experts fear monopoly-like conditions in the EV industry. Borsen online. Martini, J., & Gaarden, H. (2009, February 9). Chinese challenges Dong on EVs. Borsen online. Osterwalder, A., Pigneur, Y., & Clark, T. (2010). Business Model Generation: This book was self-published. Rask, M., Andersen, P. H., Linneberg, M. S., & Christensen, P. R. (2009, June 4-7). Local Design & Global Dreams – Emerging Business Models creating the Emergent Electric Vehicle Industry. Paper presented at the 2009 Macromarketing Seminar, Kristiansand, Norway. Roth, D. (2008, February). Driven: Shai Agassi's Audacious Plan to Put Electric Cars on the Road. Wired, 16.09. Squatriglia, C. (2011, June 16). Q&A: Renault-Nissan CEO Pledges $5.6 Billion for EVs. Retrieved 2011, August, from http://www.wired.com/ Vestergaard, F. (2012, 22 June). Oscar styrer. Weekendavisen.

 

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