REV: MARCH 14, 2012
ELIE OFEK ALISON BERKLEY WAGONFELD
Speeding Ahead to a Better Place
It was a hot sunny day in July 2008, and Shai Agassi, founder and chief executive officer of Silicon Valley-based Better Place, was driving to his company’s Israel office in Tel Aviv. As he passed by several gas stations selling fuel for $7.50 per gallon, he thought about the “Ten Word Minifesto” he planned to post on his company’s website about “why we must end our addiction to oil.” The online minifesto campaign invited anyone to post his or her view on ending oil dependence, as part of the company’s official global launch scheduled for October 29th. Agassi had left his senior executive position at SAP the previous year to start a new venture with the mission of “developing a world without oil…one electric car at a time.” Under the name “Project Better Place,” Agassi had raised $200 million to pursue his bold vision, and in January 2008, Agassi announced plans to work with automobile manufacturer Renault-Nissan and the Israeli government to deploy electric cars in Israel in 2011. In March 2008, the company announced a letter of intent to work with Danish utility, Danish Oil and Natural Gas (DONG) Energy, to introduce electric cars in Denmark as well. By July 2008, the business had moved well beyond “project” status, and the company was ready to change its name accordingly to “Better Place.” With the price of oil reaching almost $150 a barrel that summer, the company was attracting considerable attention. Better Place had recruited teams in California and Israel to help build and manage the enormous infrastructure required to power the cars. Executives were working out the details of a subscription-based ownership model, in which consumers would pay a monthly fee for use of an electric car and access to the Better Place network that would allow recharging the car’s battery or swapping it with a fully recharged one. The company was preparing to launch first in Israel and shortly thereafter in Denmark while engaging in discussions with more than 20 other countries around the globe; Agassi hoped to announce plans with a G-8 country (e.g., Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) by the end of the year. In addition, Better Place executives were meeting with automotive companies, hoping to partner with another car maker interested in building electric cars that would use the infrastructure designed by Better Place. Meanwhile, the company’s finance team was talking with investors around the world to line up the billions of dollars required to support an international rollout. As Agassi parked his car, he thought about the many unresolved questions faced by his 50-person team as they attempted to implement the Better Place vision. How much of the operating model should they pilot in Israel before expanding into other countries? Should they simultaneously build out infrastructure in Denmark? Could they successfully tackle a third or fourth region in the next year as well? He also wondered about the optimal way to price the cars and power in order to stimulate adoption while starting to recover the hundreds of millions of dollars of start-up costs. Although additional time would enable a more careful examination of these tradeoffs, Agassi felt the ________________________________________________________________________________________________________________ Professor Elie Ofek and Alison Berkley Wagonfeld, Executive Director of the HBS California Research Center, prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA...