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Exclusive: Better Place to file for bankruptcy

May 24, 2013: 2:36 PM ET

130524140921-better-place-charging-station-340xa (1)Electric car network runs out of gas.

FORTUNE -- Electric car company Better Place is planning to file for bankruptcy within the next several days, Fortune has learned.

The move will come seven months after the ouster of charismatic founder Shai Agassi, and five months after his successor -- Evan Thornley, CEO of Better Place Australia -- also departed.

Agassi also was a significant shareholder in the company, which had raised more than $700 million from firms like HSBC, General Electric (GE), Israel Corp., Lazard Asset Management (LAZ), Morgan Stanley (MS) and VantagePoint Capital Partners.

Related: Shai Agassi's ouster no surprise

Better Place originally launched in late 2007 to build out a network of battery-swapping stations for electric cars (basically a twist on charging stations). Its premise was that the electric car market would eventually take off thanks to rising oil prices and the decline of traditional automakers. And, when that happened, Better Place already would be built out and ready to serve.

But when oil hit $125 per barrel and General Motors (GM) filed for bankruptcy within just 18 months into Better Place's existence, it failed to successfully execute.

Related: Better battery financing for Better Place won't help

"The company was not well-served by having things it thought would happen over a decade happen within a year," says a close familiar with the situation. "Ultimately the idea was always based around scale, and it just didn't build it fast enough or well enough."

I also reached out to my Fortune colleague Brian Dumaine, who has covered Better Place in the past. He believes that the company underestimated the time and expense of everything from purchasing land to dealing with permitting to tearing up the streets for charger installations. He adds that another other major issue was that most electric car-makers -- such as Tesla Motors (TSLA) -- saw no reason to either make or install swappable batteries, since the battery and control system are considered each EV maker's special sauce. The only exception was Nissan's Renault unit, which produced a Better Place-compatible vehicle.

No word yet on what Better Place plans to do with its assets. A company spokeswoman has not responded to a request for comment.

Sunday update: Better Place has now filed a liquidation motion with a court in Israel. In a letter to customers, company CEO Dan Cohen said that the company will recommend that the liquidator, once appointed, continues operating the station network temporarily so that customers are given a reasonable amount of time to make alternate plans.

He added: "I want to thank you... for trusting us, walking with us on difficult days and for the courage to be the first to take part in changing the world. You were full partners in the process, and we value and appreciate the road you walked with us."

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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