Electric Cars in Israel: Economic Benefit for Consumers, but Not for the Country, Says Report

A new investigation released by the National Economic Council in the Prime Minister’s Office has revealed that, while electric cars provide a financial benefit to individual consumers, they have not yet proven economically advantageous for the Israeli economy.

The findings of the study, published on Thursday, highlight the cost implications of transitioning from gasoline-run vehicles to electric-powered ones in the context of Israel’s economic structure and taxation policies.

The research, which examined the effects of electric vehicles (EVs) on the Israeli economy in 2024, found that while consumers can expect to pay NIS 3,700 less annually for an electric car compared to a gasoline vehicle, the broader economic picture is more complex.

Despite the savings for individual drivers, the report indicates that electric cars impose a higher cost on the national economy.

In fact, due to the current taxation policy, the government would actually face a higher expenditure, with electric vehicles costing an additional NIS 740 per car compared to their gasoline-powered counterparts.

The report also projects the situation to improve slightly in the coming decade. By 2034, under the current taxation structure, the Israeli economy is expected to benefit from electric vehicles, with a net saving of NIS 1,600 per car annually when compared to gasoline-powered vehicles.

Consumers, too, are expected to see further savings, with an additional reduction of NIS 3,500 per year in acquisition costs for electric vehicles.

While the economic balance remains skewed for now, the report suggests that electric vehicles will become more profitable for the Israeli economy as acquisition costs continue to drop over the years.

The continued adoption of electric cars, however, will likely depend on further adjustments to taxation policies and other incentives aimed at encouraging their widespread use.

The National Economic Council report also emphasizes the environmental advantages of electric cars, noting their significant potential for reducing greenhouse gas emissions.

The Energy and Infrastructure Ministry has set ambitious goals for the introduction of electric vehicles, aiming to meet environmental targets that could have a positive impact on the country’s overall economic health.

According to the report, meeting these energy goals could result in a net benefit of NIS 1.2 billion to the Israeli economy, compared to a scenario where electric vehicles are not widely adopted.

These savings are primarily attributed to reductions in air pollution, improvements in energy efficiency, and long-term cost reductions associated with a lower reliance on fossil fuels.

Despite the current economic challenges, the report suggests that the transition to electric cars is essential for Israel’s long-term environmental and economic objectives.

The government’s policy adjustments and the gradual decrease in electric vehicle acquisition costs are expected to help align the interests of consumers and the country’s broader economic goals.

As Israel looks toward the future, the report’s findings underscore the importance of continued investment in infrastructure for electric vehicles and the careful monitoring of tax policies to ensure that the shift to cleaner, greener transportation remains economically sustainable for both individuals and the nation.