Energy Ministry Slams Treasury Over Electric Car Policy

Israel's Ministry of Energy has publicly criticized the Ministry of Finance's policies, warning they are severely hindering the adoption of electric vehicles (EVs) and costing the economy billions. In 2024, EVs constituted 25% of new car sales in Israel, significantly above the European average at the time. However, by 2026, this share is projected to plummet to just 12%. This decline is attributed to a series of measures by the Finance Ministry, including the cancellation of vehicle licensing fee discounts, the introduction of a mileage tax for EVs, and the gradual reduction of purchase tax exemptions, often timed at year-end to complicate planning for leasing companies and importers.

The Energy Ministry's updated demand model, based on International Energy Agency methodologies, outlines three scenarios. Without policy changes, EV market penetration could drop to 10% by 2030, making Israel a laggard among OECD nations in clean transportation. Maintaining the current trajectory might lead to a 40% market share by 2030, but this is considered fragile without active incentive support. Conversely, expanding incentives could achieve the government's goal of 90% EV adoption within four years.

The economic implications of this policy are substantial. Meeting electrification targets could generate approximately 15 billion shekels for the economy by 2030, with each converted vehicle saving about 24,000 shekels net. Conversely, current delays are projected to cause a national economic loss of 600 million to 2.2 billion shekels in 2027 alone. Furthermore, Israeli consumers are losing an average of 70,000 shekels per vehicle over its lifespan in potential savings on fuel and maintenance.

Ron Eifer, Director of the Sustainable Energy Division at the Ministry of Energy, stressed the critical nature of the coming years for Israel's position in the global EV market. He proposed a three-point emergency plan: legislative action to facilitate charging station installations in shared buildings, long-term tax and regulatory certainty for importers, and incentives for fleet operators to encourage EV adoption. The ministry also revised its electricity consumption forecasts, now estimating that even with 100% EV adoption by 2050, EVs will require only 10% of electricity production, down from previous estimates of 15%.

Despite advocating for increased EV adoption, the Energy Ministry still refuses to regulate charging station prices, citing a lack of market failure. While acknowledging high prices in a developing market, they believe competition will eventually lower them. However, a new regulation will require all charging companies to report station availability and pricing online starting in 2027, enabling drivers to compare options.