4 October 12 17:10–The thick smokescreen concealing the circumstances for the ouster of Shai Agassi as Better Place CEO cannot last much longer. Although it is a private company, its investors, which have put hundreds of millions of dollars into the electric car venture, are public companies and private equity funds, which must be accountable. There is also the effect of the company’s actions on outside circles, such as the government, the leasing market, and the car industry as a whole. Until the picture clears, we are mainly left with weighty questions.

1. What will the car leasing companies do?

The companies that buy half of the new cars sold in Israel each year have more than once proved that they can push a model to the top or destroy sales for one reason or another. Better Place has cooperation agreements with some of Israel’s largest leasing companies, some of which are defined as “partnerships”, which if they were to apply the marketing machines in full, would almost certainly enable Better Place to sell several times more electric cars.

But these partners have their own agendas. For example, most of their savings come from maintenance costs, spare parts, and related services, each of which Better Place keeps to itself together with Renault SA (Euronext: RNO) and Nissan Motor Company Ltd. (TSE: 7201) importer Carasso Motors Ltd. (TASE: CRSO). The unique character of the electric car, which Better Place continuously manages by remote, bypasses the leasing companies’ management systems, largely turning them into only financing factors.

In addition, all the leasing companies are facing major difficulties in raising money on the capital market and they are increasingly dependent on credit from importers of gasoline powered cars, which are not exactly sympathetic to the idea of the electric car. Add to this the uncertainty about maintaining the value of used electric cars, it is possible to understand why the leasing companies are a bottleneck, rather than a springboard for sales.

Better Place’s ability to break the Israeli sales barrier depends on its ability to bypass the leasing companies and persuade company executives and controllers that the electric car is worthwhile. But if it does that, it will drive collaboration with the leasing companies further away…Read More>>

Share/Bookmark