Summary:

After slow sales in Israeli — the first test bed and flagship market — Better Place is laying off hundreds of employees. The company is struggling with losses as it figures out how to make Israelis want to sign up for electric car charging like a cell phone service.

Better Place Israel

Following a difficult year, the departure of the founding CEO, and new fund raising efforts, electric car infrastructure company Better Place has been laying off hundreds of employees in Israel, according to Israeli business magazine Globes (hat tip Autoblog Green). The startup tells Globes that it’s “undergoing a reorganization” — 140 persons were laid off recently, and another 150 to 200 could be laid off soon, too, says Globes.

Better Place’s business model is to build out battery swap stations and electric car charging stations in regions and then sell electric cars like cell phones. Customers pay rates for charging cars and for a subsidized vehicle (made by Nissan) that has a swappable battery.

PHOTOS: Better Place's Battery Swap StationHowever, the model isn’t proven out yet, and Israel is the testing ground — and car sales have been slow there. Better Place only sold 23 cars in November, says Globes, which is “the lowest figure since it started marketing vehicles this year.”

Israeli customers don’t seem to be taking to the rates and plans as well as expected. Sam Jaffe, a senior research analyst with IDC Energy Insights, thinks the problem has been a marketing one. He writes in an article in October:

The Israeli car market is held hostage by a small oligarchy of leasing firms. Better Place chose to thread the needle by having those leasing firms be their distributors while at the same time not sharing enough profits with them. The leasing companies balked at becoming a middle-man, and froze Better Place out of the market. The solution to the impasse is for Better Place to either re-mold its Israel operations as a head-on competitor to the leasing companies or to renegotiate its contracts with them.

Meanwhile Better Place is the process of raising another $100 million from investors, with much of it coming from Israel Corporation. Better Place has already raised more than $750 million, and had raised a round in late August of $50 million loan (€40 million) from European Investment Bank to finish building out its networks in Denmark and Israel. Investors include GE, UBS, VantagePoint Venture Partners and others.

Better Place Preps for Israel Launch: Partners, Demo CenterAs of a few months ago, Better Place had wracked up losses of $490 million, with Israel Corp (which owns almost a third of the company) holding onto a $160 million loss. The President of Israel Corp, Nir Gilad, said during an earnings call in August: “I too would be glad to know when we will start making a profit from Better Place.”

Better Place spokesperson Julie Mullins told me last month that in Denmark and Israel, Better Place has 750 customers combined, and that more than half of the infrastructure is deployed in both Israel and Denmark — there are 24 out of 38 stations operational in Israel and in Denmark 12 out of 18 are operational, said Mullins.

Founding CEO Shai Agassi stepped down in October. Reportedly the Better Place board removed Agassi and replaced him with Evan Thornley, CEO of Better Place Australia.

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