Investors left in a Worse Place after car crash

 
Michael Bow
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A HOST of investors are poised to suffer a multi-million dollar equity loss on electric car company Better Place after the much-vaunted company filed for bankruptcy.

Global banks, including HSBC and Morgan Stanley, helped plough millions into the Israeli venture, which partnered with French carmaker Renault to develop plans for an electrical car network, after it launched in late 2007.

But heavy losses and a stagnant take up of vehicles crippled revenues at the firm, forcing management to file for the appointment of a temporary liquidator last week.

Better Place, the brainchild of former SAP executive Shai Agassi, who laid ambitious plans for a global network of battery exchange stations, is estimated to have got through $850m (£564.9m) in funding since launch.

“The path to realising that vision was difficult, complex and littered with obstacles,” the board said in a statement.

Initial funding by Morgan Stanley, VantagePoint Venture Partners and Israel Corporation in 2008 helped start up the company, followed by a further $350m in 2010.

Banking giant HSBC ploughed in $125m as part of the $350m, making it one of the largest investments of its kind for HSBC at the time.

Chief executive Stuart Gulliver said at the time that Better Place, “can succeed without government subsidy and without sacrificing consumer expectations for personal mobility”. HSBC declined to comment yesterday.

A further $200m was stumped up by firms including UBS and General Electric in 2011, valuing the company at $2.25bn.

BATTERY BIG SHOTS

DAVID VIEAU
David Vieau has been president and chief executive of lithium ion battery maker A123 Systems since the company’s formation in 2001. The business was flagged as one of the hottest companies to invest in ahead of a predicted boom in electric cars. Vieau helped float the company to adulation in 2009, raising $380m in an initial public offering. On the first day of trading shares leapt from $13.50 to over $20 – despite the firm posting losses of $40.7m in the six months leading up the float. Last October, Vieau and management were forced to file for chapter 11 bankruptcy after failing to stop the rot.

ELON MUSK
At the vanguard of the electric car market is billionaire entrepreneur Elon Musk, head of US listed carmaker Tesla Motors. South-African Musk co-founded the web-based payment network PayPal and went on found SpaceX, a private sector space technology company. Musk, said to be the basis for the Tony Stark character in Hollywood blockbuster Iron Man, set up Tesla Motors in 2003. Earlier this month the company announced its first ever profit after a surge in demand for its flagship Model S boosting revenues to $562m. Musk, who says he wants to die on Mars, is worth an estimated $2.7bn.