Fuel Price Surge Fuels Interest in Electric Cars in Israel

Interest in electric and hybrid vehicles in Israel has significantly increased, driven by sharp rises in gasoline prices, according to data from the online classifieds site Yad2. Following a more than one shekel per liter increase in gasoline prices in April, the proportion of inquiries for electrified cars on Yad2 jumped from 19.1% in March to 23.2% by June. This represents a five-fold acceleration in the growth rate of consumer interest in these vehicles compared to previous trends.

The trend has continued even as gasoline price increases have moderated and, in some cases, reversed. In early October, the price of 95-octane gasoline reached an all-time high of 8.27 shekels per liter, attributed to global price hikes and a stronger dollar. The Israeli government intervened with subsidies totaling over 450 million shekels to mitigate the price surge, bringing the price down to 7.77 shekels per liter by mid-October.

Despite government efforts and subsequent price drops, Yad2 data suggests that consumers' shift in preference towards electric vehicles is unlikely to reverse. Even after gasoline prices stabilized and decreased in June and July, interest in electric cars did not wane. In September, the share of inquiries for electrified vehicles reached 23.5%, and by early October, it stood at 23.5% of all used car inquiries.

Shani Raabed, CEO of the Vehicle Vertical at Yad2, stated that consumers are behaving like they are on a one-way street regarding fuel prices, with movement only in one direction. She explained that a change in fuel prices can accelerate a decision already being considered by consumers, and a drop in gasoline prices is not necessarily enough to reverse these changed preferences. While interest in electric vehicles is still lower than for gasoline cars, Yad2 notes that fuel price is just one factor among others like model availability, car prices, taxes, and new brands entering the market.

The long-term impact on fuel prices and electric car interest remains to be seen, particularly after the upcoming elections and a potential reassessment of gasoline subsidies by the Minister of Finance.