Business Model Innovation by Better Place:
A Green Ecosystem for the Mass Adoption of Electric Cars
Author(s): Ramalingam Meenakshisundaram, Besta Shankar
Institution: ICMR Center for Management Research, India
Competition Year: 2010
Place: 3rd place
Track: Corporate Sustainability
Key words: Better Place, Social entrepreneurship, Start-up, Electric cars, Sustainable transportation services, Smart grid, Clean technology, Renewable energy, Lithium ion batteries, Hybrid electric vehicles, Plug-in hybrid, Greenhouse gas emissions, Environmental pollution, Subscription plan, Automobiles
Courses: Innovation, Entrepreneurship, Strategic Management, Economics, Business Environment
Target audience: MBA, MS, MA, EMBA
Shai Agassi started Better Place with the ambition of setting up an ecosystem – including a ‘smart grid’ of charging stations and battery swapping facilities – for electric vehicles. These charging stations were to be powered by electricity generated from renewable sources to eliminate indirect emissions due to the operation of electric cars. Better Place also partnered with governments, parking lot operators, and companies to install charging stations. This ecosystem was expected to eliminate the barriers to the mass adoption of electric cars for personal transportation. This case discusses the innovative business model of Better Place, which proposed to offer transportation services to consumers through miles per month subscription plans, with the cost of the electric car being subsidized based on the tenure of the plan.
The software used in the electric cars, which was designed and developed by Better Place, provided the information necessary for the drivers. The company, which positioned itself as a ‘premier global provider of electric vehicle services’, was able to raise US$ 200 million by convincing a few investors. It tied up with select automakers to manufacture cars which would be compatible with its charging infrastructure and battery swapping facilities. It also received support from the regulatory authorities in Israel, Australia, Denmark, Japan, and some states of the United States and Canada. However, it remained to be seen whether the proposed ecosystem and business model would encourage widespread adoption of electric vehicles, reduce the dependence on fossil fuels, and contain the levels of environmental pollution. While the company intended to make the world a better place by accelerating the transition to sustainable transportation, was its business model sustainable in the long run?
Case Purchase Information
This case is available for purchase from ecch (310-147-1). This case is also part of the new oikos Case Collection book (Volume 2): Case Studies in Social Entrepreneurship and Sustainability published by Greenleaf.