Israel Plans Stricter Pollution Standards That Could Raise Plug-In Vehicle Taxes from 2027
The Israeli government is advancing a plan to significantly reduce the "green tax" benefits for vehicles starting January 2027, focusing mainly on plug-in hybrid models. This will be achieved by revising the pollution calculation formula that determines each imported vehicle's "green score." The Ministry of Environmental Protection recently updated the pollution emission coefficients to better reflect Israel's road traffic characteristics, introducing new categories such as "wear emissions." These emissions include heavy particles released not from exhaust pipes but from physical friction between vehicles and roads, including tire, brake, and road surface wear. This approach aligns with the European Union's view that particulate emissions from wear are a major urban pollution source, although some studies dispute this.
Additionally, a new "cold emissions" category accounts for pollutants emitted immediately after starting a gasoline engine before it reaches optimal operating temperature. This particularly affects plug-in hybrids, which frequently start and stop their gasoline engines for short periods. Early industry calculations suggest that if these new emission categories are heavily weighted, many plug-in hybrid models could shift from low-pollution groups (green scores 2-3) to higher ones (scores 8-12). Consequently, these vehicles could lose tax benefits of up to 10,000 shekels, increasing import costs by a similar or greater margin.
The automotive sector describes this as a targeted move against popular vehicle categories, led by the Finance Ministry. However, officials expect the actual price increase to be moderated by intense competition in Israel's green vehicle market, which has already driven down average prices by about 15% over the past two years due to competition and currency fluctuations.
In related market developments, Chinese automotive brands continue to expand in Israel and Europe. Dongfeng recently launched the MAGE, a large, well-equipped plug-in hybrid crossover priced around 150,000 shekels, setting a new low price in Israel's growing segment. Meanwhile, Israeli importer CalMobil secured the Austrian import and marketing license for Chery's ICAR brand, marking Chery's third brand in Austria. ICAR focuses on plug-in hybrid SUVs and plans to enter Israel this year. Other Chinese brands like GAC and Foton are also expanding their European presence through Israeli importers.
Separately, Vietnamese automaker VINFAST delivered its first vehicles in the U.S., while Israeli importer Lubinski launched the MG Urban, a family electric hatchback priced at 120,000 shekels, the lowest in its size category in Israel. The Urban offers a 405 km range (WLTP), a 12.8-inch multimedia screen, and advanced features, aiming to strengthen the electric vehicle market in Israel.
