A wave of car price hikes in Israel has begun after parliament approved last-minute changes to car taxes. Following the increase in the purchase tax on electric vehicles from 35% to 45% and the lowering of the cap on tax incentives, car importers will be required to update their prices for 2025 to reflect the resulting price increase. The table is published.
The rate of increase is not expected to be uniform as there are various tax changes in each category. Additionally, major importers have made preparations in advance for January 1st, bringing forward inventory and ordering. It currently has an unusually large inventory of 80,000 unsold cars that were due to be delivered by customs by the end of 2024 under the old tax system.
This situation is expected to lead to a gradual rise in prices and a wave of selling, limiting the blow to buyers somewhat, at least in the short term. Industry estimates suggest that most importers’ price list updates will result in price increases of up to 5%. We expect each importer’s “cheap” inventory to end and, depending on exchange rate changes, to see further significant price increases in the price list for the second and third quarters.
For gasoline, hybrid and plug-in cars, the main change is a reduction in green tax incentives, with the cap reduced from 18,000 shekels to 14,000 shekels. In addition, the most polluting vehicles will be subject to “pollution fines” of up to NIS 7,500. These changes will also likely increase prices for popular family crossovers. Ultimately, all sectors will be affected, both in the private and leasing markets.
As always, the “leader” in announcing price changes is Tesla, which has its own models in the Israeli car market. The new price list reflects an increase in purchase tax for electric vehicles, a reduction in the maximum tax credit 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, up from NIS 256,000 in December. Tesla Model 3 series prices have increased by an average of 7%, depending on the model. The basic RWD version now costs NIS 213,000, up from NIS 197,000 in the December price list. The price of the long-range version went from 228,000 NIS to 247,000 NIS.
The price list also reflects a significant increase in the annual license fee for electric cars starting in January, which, like gasoline cars, will range from a fixed fee of NIS 500 to several thousand shekels, depending on the vehicle price. However, while Tesla typically reflects tax changes on its price list almost automatically, in the past, marketing considerations have caused the price to change, sometimes within weeks, after publishing the initial price list. There was a case to reduce the table price.
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Unlike Tesla, which automatically updates its prices, there have been no major changes to the prices of other most popular electric cars on the market so far. Market leader BYD has so far increased its value-added tax by only 1%, while other brands have also increased their prices by a few percentage points. This is due to the large amount of inventory imported into Israel over the past three months.
The BYD ATTO 3, which is the best-selling electric model in the country, starts at around NIS 170,000 for the entry-level model and goes up to around NIS 180,000. The main element of the price increase was the vehicle registration fee, which increased from about NIS 500 to about 2,350 shekels due to tax changes.
Globes, Israel Business News – en.globes.co.il – Published on January 2, 2025
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