EMBA Team Assignment – Thurs EMBA Team Assignment – Thurs. Evening Better Place A Turnaround Project Proposal The logic that led to the launch of Better Place Achievements of this Israeli start up as of 2012 The context of your assignment

how to fuel future transportation? Among them, Shai Agassi. Setting the stage: Early 2000’s A growing urgency among world leaders to reduce dependence on oil Oil supply is constrained World population is rapidly growing Developing nations are buying more cars Reliance on oil = foreign policy issues Urgency to reduce GHG emissions Leaders around the world are grappling with how to fuel future transportation? Among them, Shai Agassi.

The key challenge to solve to increase diffusion of EV’s: The dominant thinking: Electric Vehicles (EV) will be the winning technology Market = Europe, China, Australia, Israel, Japan. Not U.S. Highest oil producers - Russia, U.S., Saudi Arabia. Not big markets for EV. U.S. automakers had vested interest in preventing infiltration of EV in their market. The key challenge to solve to increase diffusion of EV’s: Limited range Higher price up front 

Don’t think from U.S. perspective! Gas Prices E.g., Europeans spend more on fuel than on the car. U.S. gas prices are exceptionally low U.S. regulations create EV entry barriers In 2016, almost 1/3 of cars sold in Norway were EV; in U.S. <1% I.e., the math pencils out favorably for the customer.

2005: Agassi’s “Aha” moment What if we separated the battery from the car? A removable battery could be replaced with a fully charged battery almost as fast as it takes to fill a gas tank. What if – like a cell phone – the user only paid for the hardware up front and subscribed to a mileage plan?

A better business model solves the challenges with EV adoption Limited Range: EV’s have limited range on a charged battery. Battery switching stations enable the driver to have depleted battery swapped for a full battery in less time than filling a typical gas tank. Purchase Price: Buying an EV without the battery is less than purchasing a gas-powered equivalent. Technology changes: Newer batteries would be compatible…you don’t need a new car to take advantage of new technology. Source: Betterplace.com

Alternatives for recharging an EV? Primary technologies… Time required to recharge Hours Still a pain. Car must be designed for battery switching

The Better Place ecosystem: Customers include individuals and company fleets BP builds electric recharge grid, sells cars & subscriptions Switching stations Charging Points Automakers partner to sell more EV Governments offer incentives to reduce dependence on oil and achieve CO2 reduction goals

In 2007: Better Place was founded. In 2008: Israel, BP, & Renault-Nissan partner to achieve an all-electric car infrastructure by 2012. Israel provides incentives, R-N designs the EV, BP builds the battery switching stations and recharging points. Like with any start-up, get a stakehold first with the most likely customer on earth.

By 2011, Venture capitalists invest $700 million in Better Place In mid-2009, GM filed for bankruptcy, selling itself to the U.S. government in a $50 billion bailout. Thomas Friedman suggests U.S. would be better off giving any money earmarked for saving Detroit's auto industry to Better Place.

2008 - 2012: Stakeholders grow vested R-N invests $500 Million in developing EV with switchable battery Plans to deliver cars by 2011 400 Israeli companies enter Letters of Intent to switch car fleets to BP model Better Place Builds 38 switching stations in Israel GM & numerous countries launch programs to partner with BP…

Other 2012 Milestones Australia: GM Holden partners to sell more Volts. Charging stations to begin in eastern cities. Hawaii: Residents can charge their EV’s at Better Place's 130 charge spots. Denmark: Partnering with leading utility, which has committed €103 million Euro to introduce EV’s & infrastructure. The first of 20 battery switching stations has opened. Netherlands: A battery-powered 10-taxi demonstration project was launched in Amsterdam. China: Partnering with a utility and local governments, which are encouraging local car manufacturers to create autos with switchable batteries and promote EV adoption

A targeted milestone is missed… Slowed by economy, R-N does not deliver by 2011. The first EV with switchable batteries, the Fluence ZE, is not available until 2012. Production will ramp slowly.

October 2012: Uh oh. Company burns more cash than expected. Agassi, founder and CEO, resigns Company burns more cash than expected. BP asks investors for emergency funding of ~$150 million Cash crunch may force layoffs up to half its staff

Bolstered by cash, encouraged by world leaders, and rushing forward to establish a widespread network, BP overspent. Status in Oct/2012: Better Place employs people in Australia, Denmark, and the Netherlands, but most (400) are in Israel. CEO of Better Place Australia,Thornly, replaces Agassi Edmonds characterizes situation as classic: entrepreneur launches start-up, business manager now takes to next level. Slow production will limit supply of the Renault EV through the next 6 months.

Your Assignment: A Project Proposal It’s October 2012. The Better Place Board just called: they are considering hiring your team for a 2-month project. Tomorrow morning, they want to hear what you would do.

Assume… The new CEO is managing daily operations, and the CFO will be asking investors for more capital. Better Place proceeds with emergency layoffs. Current projections (with layoffs) indicate the company would need to file for bankruptcy in 6 months.