Oct.10, 2012 | 7:03 AM–Shai Agassi’s surprise ouster from Better Place looks like bad news for the near future of electric vehicles. But it also highlights a worrying phenomenon in the Israeli corporate world.

It is very hard to fault Agassi for what he did over the last five years. He made a visionary’s case for a network of electric-vehicle battery switching stations and rechargers backed by a communications network that would keep it all functioning. He raised an astounding $800 million from blue-chip investors and brought in Renault-Nissan as a partner. He coaxed tax breaks out of the government and cultivated friends on high places.

But while achieving all this, Agassi burned though his investors’ millions with little to show for it. By the time he gave up the wheel at Better Place, the company had delivered less than 500 cars in Israel and in Denmark – Better Place’s No. 2 market – less than 200. Meanwhile it burned through some $600 million in capital.

No one can ignore the fact that all-electric vehicles have been a hard sell, compared with hybrids like the Toyota Prius. Although Better Place went a long way toward overcoming the limitations of battery-powered cars by offering leased batteries and quick-change stations for switching them, consumers remain skittish. Its cars had little or no price advantage over conventional cars and there is an obvious risk in being an early adapter of a new and untried technology. Middle-class consumers say they want to save the planet, but they are not ready to do it at any great personal cost. An organic cucumber or biodegradable diapers maybe, but the family car? That’s real money and a real commitment. The Chevrolet Volt, the most successful electric vehicle in the U.S, sold a mere 16,348 vehicles in the first nine months of the year, even with the help of a tax credit of $7,500 per vehicles and other bureaucratic favors such as a California rule allowing lone Volt drivers the ability to use carpool lanes. By comparison, Toyota sold 183,346 Prius models during that period.

Even so, Better Place should have done better. Being a geographically small and isolated area, with high gasoline prices, Israel was the perfect test market for his concept. Agassi was enough of a business celebrity that he should have been able to pull of the same kind of marketing feats that Lee Iacocca did for Chrysler in the 1980s and Steve Jobs did for Apple over the last decade.

A lot of Better Place’s problems seem to have been self-inflicted: A failure to cope with the daunting logistical and marketing challenges involved in rolling out its network and selling cars. An autopsy of Agassi’s fate in TheMarker last week quotes several associates as saying their boss didn’t like to be bothered with the details…Read More>>

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