The worst kept secret in Victorian politics was confirmed on Tuesday when electric car battery company, Better Place, announced that former internet tycoon and Labor politician, Evan Thornley, will oversee the development of the Better Place electric vehicle network in Australia.

The statement was greeted with hostility from both sides of politics, with former Victorian Labor Premier, John Cain, alleging that Thornley’s move was inspired by “naked self-interest” and that “all notions of public service [have been] brushed aside.”

While Thornley’s loyalty has been questioned, few have considered whether Thornley is actually up to the job of running Better Place, a business which faces significant challenges.

Despite Thornley being considered by some as a technology oracle, the performance of the company he created and ran has been horrendous. LookSmart, the internet search engine founded by Thornley and his wife, Tracey Ellery, back in 1995 is currently worth only US$22 million. Given LookSmart has net cash/short term investments of approximately US$25 million, the LookSmart business is effectively valued by the market at less than zero. This of course, is of no great concern to Thornley, who sold as much as US$30 million worth of LookSmart shares at the height of the internet boom.

The failure of LookSmart also raises questions as to Thornley’s actual ability to run Better Place in Australia — especially given that both sides of Victorian politics would not appear to be especially pre-disposed to dealing with him or Better Place anytime soon. (The Victorian Opposition’s scrutiny of business spokesman David Davis stated on Wednesday that Thornley would “be the puppet master at Better Place.”)

Meanwhile, Better Place’s business model is not without serious risks. The company’s website articulates its apparent business model in vague motherhood statements manner not indifferent to the dotcoms of Thornley’s era, noting:

Why pay for an addictive, expensive and harmful substance like oil when you can simply pay for transportation as a sustainable service? Why produce pollution when you can bring your emissions to zero and produce economic advantage as the only by-product? The proposition sells itself.

  • Drivers pay to access a network of charging spots and conveniently located battery exchange stations powered by renewable energy.
  • Drivers pay for the miles they drive.
  • Cars are made much more affordable — even free in some markets – by the business model’s financial and environmental incentives to add drivers into the network.
  • Better Place operates the electric recharge grid that brings it all together.

This is transportation as a sustainable service, with drivers as subscribers, and Better Place as a true “mobility operator.”

Essentially, Better Place intends to create a series of “charging spots”, essentially serving as ‘petrol stations’ for electric vehicles. Electric car users would be able to either charge their battery, or switch their flat battery for a fresh one at a Better Place outlet.

While the idea seems plausible, there are several challenges facing Better Place. Most importantly, its business model is predicated on the fact that electric cars will be limited to a range of approximately 100 miles and that eventually, there will be a widespread take-up of electric vehicles. (So far, Better Place has issued a series of media releases with vague announcements regarding electric vehicle development in Israel, Canada and Ireland, none of which look like creating actual earnings for the company).

The problem for Better Place is that by the time electric cars reach a critical mass and such that a proliferation of charging stations become viable, it is likely that battery technology will have progressed to the point where the battery life is significantly increased. Once battery life reaches 400 kilometers per charge and electric car users can simply recharge their vehicles by plugging them into a point in their garage, the need for Better Place’s “charging stations” would be substantially reduced.

In a sense, Better Place is caught in a Catch 22 — its business isn’t viable until there is a proliferation of electric vehicles, and when there is a proliferation of electric vehicles its services will most likely be redundant.

But while its business model is dubious, Better Place founder Shai Agassi can take solace from the fact that Evan Thornley has plenty of experience making millions from unsuccessful ventures.