Israel Risks Billions as Electric Car Adoption Falters, Ministry Warns

Israel's Ministry of Energy and Infrastructure is sounding the alarm over a significant slowdown in electric vehicle (EV) adoption, warning that without policy changes, EV sales could plummet to just 10% of the market by 2030, far below the government's 90% target. This decline could cost the Israeli economy billions of shekels.

The trend has reversed sharply: EVs constituted 25% of new car sales in 2024, but this figure is projected to drop to 20% in 2025 and a mere 12% in the first half of 2026. The ministry's new demand model outlines three scenarios. In a low-support scenario with insufficient charging infrastructure investment, EV sales could indeed fall to 10% by 2030. A baseline scenario, assuming current support policies continue, predicts around 40% EV sales. Achieving the 90% target requires a substantial acceleration in adoption through broader incentives and policy measures.

The economic implications are stark. The ministry estimates that a full transition to EVs by 2030 could yield cumulative benefits of approximately 15 billion shekels for the economy. Conversely, delaying this transition could result in economic losses of 0.6 to 2.2 billion shekels by 2027 alone. The net benefit per EV replacing a gasoline car is estimated at 24,000 shekels, factoring in lower energy and maintenance costs, and reduced emissions. Consumers could save an average of 70,000 shekels over the vehicle's lifespan.

Several barriers are hindering EV growth. A major challenge is installing charging stations in shared residential buildings, where about 80% of Israelis live, posing technical, legal, and commercial hurdles. The fleet and leasing sector, responsible for 40% of new car purchases, lacks incentives for managing charging infrastructure. Other concerns include driving range anxiety, uncertainty about resale values, and regulatory ambiguity.

To counter this trend, the ministry recommends establishing clear regulations for charging infrastructure in shared buildings, potentially with financial assistance. It also calls for a long-term, stable tax and regulatory framework to reduce market uncertainty and targeted measures for fleet operators. The ministry suggests adopting European models where manufacturers and importers are held accountable for sales or emissions targets, with penalties for non-compliance. Ron Eifer, director of the Sustainable Energy Division, stressed the need for consistent, active policy, including removing shared-housing barriers, ensuring tax certainty, and engaging fleet companies.