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Better Place Lands $350 Million in New Funding
Better Place secured a new round of funding for the start-up company’s grand vision of creating a global network of electric car battery swapping and recharge stations. London-based HSBC led the $350 million round of financing, contributing $125 million in exchange for a 10 percent stake in Better Place. That gives Better Place a market value of $1.25 billion—even before the company has put its first battery swapping station into service.
The backing from HSBC, a conservative bank, and a consortium of other investors is a major vote of confidence for Better Place—and could begin to silence skeptics of the companyﾒs technology and business plan, of which there are many. With future electric car models likely to come in many shapes and sizes, many industry experts believe that battery swapping is major technical challenge. In addition, many market forecasters predict that electric cars will take a decade or so to reach a small niche of car buyers. And plug-in hybrids like the Chevy Volt, Prius Plug-in Hybrid, and Fisker Karma, don’t need battery swapping—they run mostly on electricity, but use a small gas-engine to extend the vehicle’s range to a level on par with conventional vehicles.
Yet, the venture capital community is convinced that Better Place is creating a breakthrough disruptive technology. “It could be a game-changer in its sector the way Google and Microsoft were in theirs,” said Anthony Bernbaum, global head of special opportunities for HSBC. Speaking to The New York times, Bernbaum added, “We started out cynical, and we’ve done expert diligence. We think Better Place is going to work.” According to Shai Agassi, Better Place CEO, the new capital will be used to complete R&D and to get trial efforts up and running by the middle of next year. “We’re still 18 months away from a full operating network,” said Agassi. Better Place has raised about $700 million to date, and by some estimates, will need another billion dollars to realize its vision. The company is hoping to play a key role in getting the world off oil. Under Better Place’s plan, consumers would buy electric cars from major auto companies, but lease the batteries from Better Place—similar to how cell phone owners buy the phone and purchase minutes. Nearly every global automaker is planning to introduce a pure electric car in the next few years. Electric cars commonly have a driving range of about 100 miles before they need to be fully recharged for several hours. Better Place would build a vast network of charging stations and battery-swapping locations to replace today’s gas stations. Electric vehicle drivers with depleted batteries would charge-up or swap-out in a matter of minutes, and be on their way.
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