The wave of car price hikes in Israel has begun, after the Knesset approved the changes vehicle taxation at the last minute. Following the purchase tax increase on electric vehicles from 35% to 45% and the reduction in the tax benefit ceiling, car importers are publishing updated price lists for 2025, which reflect the resulting price increase.
The rate of increase is not expected to be uniform, as various tax changes have occurred in each category. In addition, the major importers prepared in advance for January 1 and brought forward inventories and orders. As of today, they hold an unusually large inventory of 80,000 unsold cars that were released from customs before the end of 2024 under the old taxation.
This situation is expected to lead to a gradual increase 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, the updated price lists among most importers will bring about a price increase of up to 5%. A more significant jump in price lists is expected to occur towards the second and third quarters, with the end of each importer's "cheap" inventories and subject to changes in currency exchange rates.
Regarding gasoline, hybrid, and plug-in cars, the main change is the cut in the green tax benefit, with the maximum ceiling dropping from NIS 18,000 to NIS 14,000 shekels. In addition, a "pollution fine" will be imposed on the most polluting cars, which can reach up to NIS 7,500. These changes will also push up the prices of popular family "crossovers." Ultimately, the effects will be felt in all areas, both in the private and leasing markets.
As always, the "leader" in publishing price revisions is Tesla, which operates with a unique model in the Israeli car market. The new price list reflects the increase in the purchase tax on electric vehicles, the reduction in the maximum tax benefit and the increase in VAT from 17% to 18%.
Tesla's sales leader in Israel, the Model Y series, has increased in price by an average of about 11%. The price of the entry-level version of the Y RWD has climbed to NIS 247,000 from NIS 218,000 in December. The long-range version now costs NIS 291,000, up from NIS 256,000 in December. The price of the Tesla Model 3 series has increased by an average of 7%, depending on the model. The base RWD version now costs NIS 213,000, up from NIS 197,000 in December price list. The long-range version now costs NIS 247,000, up from NIS 228,000.
The price lists also reflect the big hike in the annual license fee for electric vehicles starting in January, from a fixed rate of NIS 500 to thousands of shekels, depending on the price of the vehicle, as with gasoline vehicles. However, Tesla usually reflects tax changes in price lists almost automatically, but in the past there were cases where, after publishing the initial price lists, Tesla reduced the price list prices due to marketing considerations, sometimes within a few weeks.
Unlike Tesla, which updates prices automatically, there have been no significant changes in the prices of the other most popular electric vehicles on the market so far. BYD, the market leader, has so far only increased the 1% VAT, and other brands have also only raised prices by a few percent. This is due to massive inventories imported to Israel in the last three months.
BYD ATTO 3, which is the most sold electric model in the country, now starts at about NIS 170,000 for the entry-level model, going up to about NIS 180,000. A significant component of the price increase is the registration fee for the vehicle, which rose from about NIS 500 shekels to about NIS 2,350 due to the tax changes.
Published by Globes, Israel business news - en.globes.co.il - on January 2, 2025
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