Israelis Shun Electric Cars Despite Rising Fuel Prices

Global oil prices are nearing their March highs due to ongoing "asymmetric warfare" by Iran and its proxies targeting oil infrastructure and tankers in the Persian Gulf. Recent attacks on Saudi oil production facilities have exacerbated the situation, with fears that direct assaults on oil and gas fields could lead to even higher prices. Drivers worldwide are feeling the economic strain, but Israelis appear largely indifferent, possibly due to faith in government subsidies and a strong shekel. However, these subsidies may soon diminish, potentially pushing gasoline prices in Israel to around 9 shekels per liter by late October, a significant psychological threshold.

Globally, consumers and fleet managers are adopting strategies to reduce fuel costs, including increased use of public transportation where available and a shift towards electric vehicles (EVs). Europe and even the US are seeing a growing adoption of EVs, despite the impending end of purchase incentives in the US. In Israel, EVs theoretically offer advantages due to short travel distances, a relatively dense charging infrastructure, lower electricity costs compared to high global fuel prices, and a widening cost-per-kilometer gap favoring EVs over gasoline cars.

Despite these advantages, Israeli consumers are increasingly turning away from fully electric cars, with sales significantly lower than in previous years. Instead, they are favoring hybrid and plug-in hybrid electric vehicles (PHEVs). PHEVs are the fastest-growing segment in the Israeli market, promising substantial energy cost savings. However, their real-world fuel consumption is highly variable and often much higher than official figures, especially when not consistently charged from the grid. A recent study indicates that PHEVs driven primarily on their gasoline engines can consume four to five times more fuel than manufacturer-reported figures.

Fleet managers in countries like the UK are implementing stricter controls on fuel consumption, using smart fuel cards, apps to find cheaper gas, and telematics systems to monitor driver behavior. In Israel, however, the impact of rising fuel prices on corporate fleets, which manage around 300,000 company cars, has not yet been fully absorbed. While the annual fuel cost for a typical company car has risen significantly, the adoption of EVs in Israeli fleets remains minimal. The popularity of PHEVs and reluctance to alter employee fuel benefits, seen as a labor relations issue, contribute to this inertia. This situation may change as prices approach 9 shekels per liter and the actual consumption of PHEVs becomes more apparent.