Israel Corp. will not invest more money in the electric car venture.
Israel Corporation (TASE: ILCO), the controlling shareholder in electric car venture Better Place, notified the TASE today that it has decided not to invest in the venture's upcoming financing round because no investors were found to share in the large investment needed. Better Place will shortly submit a motion for liquidation with the court.
Market sources estimated recently that Better Place would need at least another four years, and investment of another $500 million, to reach operating breakeven. This estimate is based upon annual investment of some $120 million in the venture, which recently underwent a streamlining program including layoffs and shutting down of activities.
Better Place was founded in 2007, and lost $812 million (NIS 3 billion) through the end of 2012. It lost $454 million in 2012 alone, and had a going concern qualification attached to its financial report. Most of the loss occurred in the fourth quarter, in which the company lost $251 million, after making a $179 million write-down on activity in Israel and for restructuring.
Better Place began building battery replacement posts at recharging stations. The company assumed that the price of oil would continue to rise, and that sales of gasoline-powered cars would fall. Although the price of oil reached $125 per barrel 18 months after the company was founded, and the world's biggest carmaker, General Motors (NYSE: GM), filed for bankruptcy in 2008, Better Place was unable to exploit this.
Published by Globes [online], Israel business news - www.globes-online.com - on May 26, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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