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Jacob Wolinsky
Hedge fund expert

International Automakers Flood Into Israeli EV Market Despite Economic And Supply Chain Challenges

Against a backdrop of economic uncertainty and supply chain disruptions, the Israeli electric vehicle (EV) market witnessed significant growth during the first half of the year, surpassing the corresponding period for 2022.

Delivery of new and imported electric vehicles rose by nearly 219%, as more than 29,000 new electric cars were delivered during the first six months of the year, further surpassing the 27,600 EVs delivered in the whole of last year, according to most recent reports.

Following the positive growth, EV deliveries now represent 16.3% of Israel’s new vehicle market, nearly tripling its market share.

This however wasn’t without any challenges, and experts predict that in the coming months, current market challenges, and new developments within the global EV market could lead to the Israeli electric car market quickly losing steam.

But perhaps there could be light at the end of the tunnel, as new opportunities in Israel’s growing EV market present themselves to international automakers now flooding the local marketplace.

Israel’s Growing EV Market

In general, electric cars are still an up-and-coming niche, as the macro landscape in the Middle East sees a significant reliance on oil and fossil fuels.

However, in more recent months, some countries, including Israel have launched pilot programs to increase the delivery of EVs, in an attempt to reach net zero and carbon neutral goals.

Back in May 2022, the Environmental Protection Minister, Tamar Zandberg, and the Ministerial Committee for Legislation approved Israel’s first Climate Bill. At the time, the bill was seen as a “historic moment” that would allow the government to lower its carbon emissions to net zero by 2050.

Even more, in November last year, the Finance and Environmental Protection Ministries announced their strategy to join forces with the White House and Canada, to further improve its forward-looking roadmap to decrease carbon emissions in all of its government-related activities.

The push for more aggressive environmental and climate action comes after several countries have announced ambitious plans to eradicate carbon emissions in the coming years, as global temperatures continue to rise.

As part of these plans, the transition to electric vehicles is perhaps a hallmark moment that could improve trade between Israel and other nations, and give the domestic EV market a significant boost.

There has already been steady growth, as Israel’s domestic EV market sees a flood of international car markets now entering the marketplace at a rapid pace.

Manufacturers such as BYD, Geely, Hyundai, Tesla, and MG, among others currently make up the largest percentage of the market segment.

Delivery statistics showed that last year, Geely Geometry, represented roughly 18.8% of new EVs delivered in Israel. In second were Tesla (16.7%), MG (14.2%), and the Chinese-based automakers, BYD (10.2%).

The market has become increasingly concentrated, with several household names in the car industry now pushing for faster and bigger deliveries in Israel. What’s more, some automakers out of Asia have headlined the important role Israel plays for EV transition in the Middle East, and for countries outside of Europe.

Israel Welcomes International EV Makers

The last couple of months have witnessed droves of international EV makers entering the domestic market, as they attempt to establish their influence among drivers and the auto industry.

Perhaps the most significant was the announcement of Chinese-based EV maker, Xpeng, that approved a landmark deal, which would make Israel the company’s first and most important international marketplace outside of Europe.

Around the same time, in July 2023, another premium electric car manufacturer from China, Zeekr, a brand under the Geely Holding Group announced their plans to launch two of its newest models in Israel in the second half of the year.

As part of their plan, the company will launch and distribute its EV models, and develop a sales and marketing network in the country.

Currently, Zeekrs is set to launch in the fourth quarter of the year, with pre-sales already underway in Israel.

Industry data revealed that BYD, another Chinese EV manufacturer, sold more than 8,497 electric models, the majority of them their Atto 3 model between January and May 2023. Growing demand for BYD models has made them the fifth best-selling EV maker in Israel.

Others, such as Chery Automobile, which entered the Israeli EV marketplace in the second half of last year, sold roughly 7,165 vehicles in Israel over the same January to May period.

Well-known electric vehicle makers, such as Elon Musk-owned Tesla have also made an imprint on Israeli motorists, selling more than 2,959 Tesla Model 3 units last year. Despite Tesla slashing EV prices, in an attempt to increase its global presence, Chinese car maker Geely Auto Group had a larger market share, selling more than 5,381 of its Geometry C electric models in Israel in 2022.

Competition among international electric car manufacturers has steadily heated up during the first five to six months of the year. With many looking towards Israel, as perhaps an important marketplace outside of Europe, and perhaps more in the Middle East, the domestic EV market could bolster with significant growth in the coming months, however, economic and supply chain challenges could curb these developments.

Facing the EV market challenges

While there have been impressive representation from several international EV makers during the last two to three years, many questions remain unanswered over the long-term sustainability of Israel’s EV marketplace.

Perhaps the most significant problem currently, is the existing pricing model, or rather more the lack thereof. The rapid penetration of EV makers has meant that those who have an upper hand can heavily monopolize the fact that consumers and dealers have limited knowledge.

Most recent figures indicate that the average sticker price for an EV listed in Israel, during the first six months of the year was roughly NIS 165,000. While some manufacturers, such as Tesla, have announced several price cuts to their models, the average cost of newly listed EVs is still well above what the average Israeli motorist can afford.

Matthew Hart of Axlewise, an online automotive information platform, says that the price of electric cars mostly depends on the type of model consumers are hoping to buy. “On average, some models will cost roughly USD $30,000, while there are more expensive models available that’s well above USD $100,000. Unfortunately, these prices will remain semi inflated for quite some time, until demand subsides, and supply chain conditions have steadily improved and helps to alleviate some of the pricing pressure.”

Various sources suggest that electric car prices in Israel remain expensive compared to other developed countries. Back in 2020, a GAC GE3 SUV model sold for roughly NIS 130,000. Prices of Teslas, and perhaps the more popular Model 3 rose by NIS 18,000 since the start of the year, despite Elon Musk slashing the prices of most of its popular models. However, more affordable EV models, such as the Nissan Leaf could range anywhere from NIS 30,000 to NIS 40,000.

Part of the pricing model problem is that there is currently limited understanding of the secondhand EV market in Israel. Not many private buyers receive the necessary information from car dealerships and traders. This creates not only a challenge for lower-tier consumers hoping to enter the EV market but furthermore poses new risks in the long term.

Another obstacle that could cause Israel to fall behind in the race toward electrification is the lack of sufficient EV charging infrastructure.

One research paper from 2021 theorized that there is still a need for improvement in terms of Israel’s charging infrastructure and the national energy grid to support new public and private charging points.

Another article claims that by the end of 2021, there were only 791 charging units available for 15,000 EVs.

Additionally, the divide between available charging points is fairly limited, with only 15% of charging points accounting for public charging stations. Limited availability, and the increase in private charging units, could further divide consumers and businesses to transition from combustion to electric.

Ultimately, this should be an indication to EV manufacturers, that when consumers or motorists do not have access to adequate charging infrastructure, they simply will not be enticed to purchase electric cars.

This, however, rests on the shoulders of both private and public industry to develop a more strategic approach that could allow the EV market to grow in unison with the sufficient availability of infrastructure.

Israel could adopt more progressive policies, such as China, the U.S., and other European nations, where the provision of charging infrastructure for EVs partially relies on the assistance of government aid.

The penetration of EV makers in Israel represents a significant opportunity for EV manufacturers. Yet, while there is a positive demand for EV models in Israel, slow domestic adoption of sufficient infrastructure could become a drawback for the marketplace in the coming years.

Final thoughts

The deployment of electric vehicles in Israel has been driven by strong demand from consumers and businesses, but a further indication of government efforts to reduce carbon emissions and align their net-zero goals with that of other regions in the Middle East and the West.

However, there remain some existing problems that could be a major headwind for EV manufacturers entering the Israeli EV marketplace. Despite these manufacturers launching a wave of new models, insufficient EV infrastructure, and a lack of sales networks in the country could be major challenges in the near term.

Nonetheless, while there is still room for improvement, it’s perhaps optimistic to witness how well Israelis have welcomed electric vehicles into the domestic marketplace, in an attempt to rapidly electrify the Israeli auto industry.n

About the Author
I am the founder and CEO of ValueWalk - a popular financial information company. Before launching ValueWalk, I was first an equity analyst at a micro-cap focused private equity firm and then moved to a small/mid-cap value-focused research shop. I also have experience working in business development for hedge funds. I live with my wife and four kids in Passaic, New Jersey.
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