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An economic Iron Dome Israel isn’t using

For the sake of national security, Israel should provide tax and regulatory breaks to help the electric car maker succeed
Better Place RFID tag and key ring (Photo: Brian of London)
Better Place RFID tag and key ring (Photo: Brian of London)

A few weeks ago I chided Better Place and gave them advice on marketing their tremendous electric driving service in Israel. Better Place is doing much better now: they’re focusing exclusively on Israel and Denmark. Sales have dramatically improved.

Now I want to look at the Israeli Government. Why is it refusing to take advantage of the massive private investment Better Place has made in Israel?

Once upon a time, Shimon Peres asked Shai Agassi what he would do to make the world a better place. The Israeli Government looked like it would take a giant leap and be the first nation to truly move away from the world’s devastating dependence on a single source of fuel for almost all transport.

Just as Israel planned for and has now overcome the problem of sparse water in a desert, Israel could be the first nation to dramatically wean itself off liquid fuel derived from OPEC controlled oil. The reason oil is a huge problem is its dominance. There is no competition: if it moves it probably runs on oil and only oil. Control the price of oil, and you control the only global economic lever.

No other single commodity’s price has a greater impact on every aspect of every economy in the world than oil controlled by OPEC.

Electricity, however, can be produced from many competing sources and the interplay between these has kept its cost astonishingly constant for decades.

Today the Israeli Government seems to be sliding backwards and doing nothing to take advantage of a huge private gift. It may even be actively working to undermine it.

The government’s Alternative Fuels Administration has exactly the same goal as Better Place: reducing oil dependence. So why is it totally ignoring Better Place’s massive investment in Israel and Better Place’s ability to switch many cars and driven kilometres from oil to electricity today?

Over four years, and with only privately raised money, Better Place has employed hundreds of people, built a massive network of public and private charging stations and 37 fully automatic battery switch stations. Better Place’s decision to perform most of its R&D in Israel means the majority of money spent from the private $850m raised has enriched the Israeli economy.

The investment by Better Place in Israel amounts to around $500m. If this was California that would be $7 billion. You would think any government in the world would be fighting to have an investment of that scale made in its territory.

Far from fighting to have the investment made, it seems the Israeli government is fighting to ignore, or even destroy it.

Better Place RFID tag and key ring – Photo: Brian of London

The only visible help from the Israeli Government has been a small tax break on the import duty of the car. Even this break is not much more than that given to importers of hybrids like Honda and Toyota.

In Europe, and even the US, there are measures like complete elimination of road tax for owners, large reductions in the company car taxes paid, free parking, free access to congestion charged areas, direct tax refunds at purchase and many other incentives.

Despite a complete absence of all these measures, in January this year, by selling more than 100 cars Better Place achieved 0.5% of the new car sales in Israel: in the US, battery cars might be 0.002%! Just for comparison, 91 Toyota Priuses were sold in January.

Better Place is not competing to sell an electric car against other electric cars. It is selling a driving service in direct competition with oil burning cars. This is the massively dominant technology serviced by thousands of installed gasoline stations blighting and polluting the country already.

Next time you drive make a conscious effort to count gas station and tell me if they’re pretty or not. Electric cars will never need this level of infrastructure because 90%+ of energy is delivered at home while owners are asleep.

The electric car is seen, by those who’ve not tried it, as a compromised solution. Only today’s overwhelmingly happy owners know the secret: the feel of the car and the sheer exhilaration of driving it and the joy of starting each day with a full battery more than compensate for uninformed, perceived shortcomings.

We have all gotten used to the smelly ritual of refueling our gasoline cars: once one acclimatises to home charging and extended journey switching, one quickly prefers the new habits. The opinion of early customers in Israeli is unanimous: the system works and is more than a match for the old ways of oil burning.

Now, after this massive investment, what is the Israeli Government promoting? Hugely flawed compressed gas cars which are universally banned from underground parking lots or cars fueled by natural gas derived methanol. This comes from the “Prime Minister’s Office for Alternative Fuels.” Why, after all this private investment has already been made does this office, under Eyal Rosner, only favour solutions which enrich entrenched interests of existing oil and gas industry players?

There are so many very low cost or zero cost actions the Israeli Government could be taking if it is serious about kicking the oil habit: a reduction in company car tax for electric vehicles; parking price reductions; reduction in fees levied on Israel’s toll road; purchase for use by Government ministers and employees; legislation making it harder for condominium buildings to block installation of home charge points; stipulation to build charging infrastructure into new parking lots and many more.

None of these measures (all in place in various European countries) would come even close to matching the money Better Place has already invested in Israel. I’m far from an advocate of government intervention in markets, but Better Place’s current sales offer is attractive enough for the Government to lease cars for its own use. They are competitive with similar vehicles. France just ordered more than 2000 electric cars from Renault without a switch network in place!

When sold and bought in larger numbers, electric cars will become dramatically cheaper than existing oil cars. If we are serious about having any alternative to oil burning cars: this is the strongest horse to back with minimal short term assistance. Just the confidence given by the government leasing 500 cars would make a huge difference and actually save taxpayers money from day one.

The cost per kilometre of the electricity to drive these cars will continue to be stable or decline during times when oil prices will be hugely volatile. The cars themselves are more efficient at using energy than their oil burning cousins especially for the large number of very short journeys we make today. Those owners whose driving pattern they fit, absolutely love them.

The pay back? There are so many. Lower costs right now. Steadily improving local air quality. A reduction in funds transferred out of the country to buy oil. World leadership in the key technologies of the future. But most important in my opinion: protection from the weapon of maliciously manipulated oil prices that has been battering world economies for decades.

It’s an economic Iron Dome: its built and working already. Turn it on.

Better Place Renault Fluence ZE cars sold and awaiting delivery 27 Feb 2013 – Photo: Brian of London
About the Author
Brian of London made aliyah from the UK to Israel in 2009. For many years he has blogged and broadcast about Israel, technology and other subjects. Most recently he's focused on the experience of driving an electric car every day. Brian has a scientific PhD but today owns a business in Israel.