This week, Israeli Prime Minister Benjamin Netanyahu met with Elon Musk, CEO of Tesla, the world’s largest automotive company. Tesla has succeeded in revolutionizing the automotive industry with electric vehicles, raising the question – has Israel missed the biggest economic opportunity in its history by neglecting the electric car industry?
Every generation has its heroes, sometimes unique rock bands, sometimes movie stars or athletes who excite us, and in other cases, they are entrepreneurs who manage to create a reality beyond imagination. Israel had one of its heroes at the beginning of the millennium, the serial entrepreneur Shai Agassi, who managed to foresee what was coming long before anyone else. As early as 2000, he believed that if electric cars were cheap, convenient, and had similar performance to gasoline cars, the world would move in that direction, and Agassi wasn’t wrong in his prophecy. In 2022, around 10 million electric vehicles were sold globally, with the American automotive giant Tesla alone selling about 1.3 million.
From a young age, Agassi was considered an international success, a phenomenon seen once in a generation. He founded the Israeli start-up company Top Tier Software, which was acquired in the early 2000s by the German software giant SAP for $400 million. He later joined the company’s board of directors and was one of the leading candidates for the CEO position. But Agassi had bigger plans – to make the world a better place, to change the global automotive industry, and to free it from dependence on oil.
The electric car venture was considered a breakthrough at the beginning of the millennium. Agassi had the solution to a problem and focused on a system for electric cars powered by batteries. But in 2007, he faced several challenges: he needed a car manufacturer to agree to lead a joint project, a government to support the project by establishing hundreds of thousands of charging stations, and, of course, he needed money to fund this massive project. Amazingly, Agassi managed to meet all these conditions, and Better Place embarked on its journey with a $200 million fundraising and a deal signed in 2008 with the Renault-Nissan Alliance to produce cars equipped with advanced lithium-ion batteries. In 2011, the company sold 48 electric vehicles, and in 2012, it sold about 518 vehicles, ten times more than the previous year. However, Better Place failed to recover from the peak it experienced in 2012.
The company needed financial support, regulatory support, and a country that would give spirit to a project aimed at changing the world. In one way or another, it can be said that Israel turned its back on its industry and entrepreneurship. Looking back, the loss is ours, as the world did not stand still. In the East, BYD was established in China in 2003 and is now traded at a market value of $95 billion. In the West, Tesla was founded in 2003, now traded at a market value of $850 billion. In Israel, Better Place did not survive and ended its business in 2013, and Israel’s electric car revolution is far from the goals of Western countries.
The important lesson that Israel needs to learn from this event is simple: Israel needs to allow entrepreneurs and leaders to lead tomorrow. It needs to support them through budgets for institutions like the Innovation Authority and invest in the Fund for Innovative Ventures.
Better Place, led by Shai Agassi, could have become an international success story, the largest Israeli company in the world, one of the leading and most advanced companies in the automotive field, and providing direct and indirect employment to the Israeli economy. From this story, Israel, above all, lost, from the spearhead of the electric car world at the beginning of the millennium to the bottom of the list today.
The infrastructure for electric cars in Israel still lags behind the rest of the world. Bureaucracy and taxation hinder growth and encourage consumers to buy gasoline-powered cars. Opportunities come and go; it’s just that on the way, one needs to exploit as many of them as possible to succeed.
Today, a change is brewing, a legal revolution. I am not a political pundit, and I certainly cannot say whether the laws will pass or fail, but I can say that in all this process, Israel is missing significant opportunities in the world of technology, and it may cause a significant brain drain. Technology continues to advance, it does not wait for the government, the AI revolution is already here, and Israel must stand at the forefront and support companies, entrepreneurs, and industry so that in a decade, we will not sit here and tell another tale of a major setback for the Israeli economy. All government ministries need to understand that this is not an economic investment; it is a strategic investment in our future. A strong economy equals security, education, health, infrastructure, and more.