Israel Faces Billions in Losses as Electric Vehicle Adoption Plummets

Israel's adoption of electric vehicles (EVs) is experiencing a significant decline, falling far short of government targets and potentially costing the state billions of shekels, according to a policy document released by the Ministry of Energy. The ministry warns that the economic damage could reach 1.6 billion shekels in 2026 and 5 billion shekels by 2030 if the trend continues. The document highlights that the EV penetration rate, which was projected to be 25% in 2024, is now expected to drop to just 11% in 2026.

The Ministry of Energy estimates that each EV replacing a gasoline car provides a societal benefit of approximately 24,700 shekels over 12 years, accounting for energy savings and reduced pollution. Meeting the government's goal of 90% of new car sales being electric by 2030 would yield an estimated 15 billion shekels in benefits for the state by the end of the decade, in addition to enhancing energy security and reducing reliance on oil.

Conversely, a slowdown in EV adoption translates to substantial financial losses for the state. The ministry also emphasizes the significant economic advantages for consumers, estimating average savings of around 70,000 shekels over the vehicle's lifespan due to lower energy, maintenance, and tax costs compared to gasoline cars.

Despite government targets, the ministry asserts that there is currently no effective policy to promote EVs, and the downward trend may persist. Key barriers identified include bureaucratic hurdles in installing charging stations in apartment buildings, a lack of EVs in the leasing market (which constitutes about 40% of Israel's car market), and consumer concerns about driving range and charging infrastructure availability across the country.