Tesla only EV in Israel to raise prices after tax hike

The wave of car price hikes began in Israel, after the Knesset approved changes to the car tax at the last minute. After increasing the purchase tax on electric cars from 35% to 45% and reducing the ceiling on tax benefits, car importers publish updated price lists for 2025, which reflect the resulting increase in prices.

The rate of increase is not expected to be uniform, as different tax changes have occurred in each category. In addition, major importers prepared in advance for January 1 and placed inventories and orders. As of today, they have an unusually large inventory of 80,000 unsold cars released from customs before the end of 2024 under the old taxes.

This situation is expected to lead to a gradual rise in prices and a wave of sales, which will slightly limit the blow to buyers, at least in the short term. According to industry estimates, updated price lists among most importers will result in price increases of up to 5%. A bigger jump in list prices is expected in the second and third quarters, as each importer’s “cheap” stock runs out and is subject to changes in currency exchange rates.

Regarding gasoline, hybrid and electric cars, the main change is a reduction in the green tax allowance, with the maximum reduced from NIS 18,000 to NIS 14,000. In addition, a “pollution fine” will be imposed on the most polluting cars, which could reach 7,500 shekels. These changes will also raise the prices of popular family crossovers. Ultimately, the impacts will be felt across the board, whether in the private or rental market.

As always, the “pioneer” in deploying price adjustments is Tesla, which operates a unique model in the Israeli car market. The new price list reflects an increase in the purchase tax on electric cars, a reduction in the maximum tax subsidy and an increase in value-added tax from 17% to 18%.

Prices for the Model Y series, Tesla’s sales leader in Israel, rose by about 11% on average. The price of the entry-level version of the Y RWD rose to NIS 247,000 from NIS 218,000 in December. The long-range version now costs NIS 291,000, compared to NIS 256,000 in December. The price of the Tesla Model 3 series increased by an average of 7%, depending on the model. The base rear-drive version now costs NIS 213,000, up from NIS 197,000 in list prices in December. The long-range version now costs NIS 247,000, up from NIS 228,000.

The price lists also reflect the significant rise in annual licensing fees for electric vehicles starting in January, from a fixed price of NIS 500 to thousands of shekels, depending on the price of the vehicle, as is the case with gasoline vehicles. However, Tesla usually reflects tax changes in list prices almost automatically, but in the past there have been cases where Tesla, after publishing initial price lists, reduced list prices due to marketing considerations, sometimes within a few weeks.

Unlike Tesla, which automatically updates prices, there have been no major changes in the prices of other most popular electric cars on the market so far. BYD, the market leader, has so far increased VAT by only 1%, and other brands have raised prices by only a few percent. This is due to the huge stock that Israel has imported in the past three months.

The BYD ATTO 3, the country’s best-selling electric model, now starts at around NIS 170,000 for the entry-level model, and tops out at around NIS 180,000. An important component of the price increase is the car registration fee, which rose from about NIS 500 to about NIS 2,350 due to tax changes.

Published by Globes, Israel Business News – en.globes.co.il – on January 2, 2025

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