Will Israel be a Leader in Introducing Electric Cars? Ask the Tax Man!

There’s more involved in running an electric car in Israel than just the electricity.

The year 2011 is deemed by some to be the year when electric cars and their infrastructures will hopefully begin a trend in which people will begin using these environmentally friendly cars over those burning fossil fuels. The Better Place infrastructure for recharging these vehicles, as well as exchanging their specially innovated lithium ion batteries for fresh ones to extend the car’s cruising range will begin to be installed next year; allowing the first batches of  these cars to hit the roads of Israel. There may be a bit of a problem involving the costs of these cars, however,  in that Israeli tax authorities may not allow attractive enough reductions in the tax structure for the cars; according to an article in Globes financial news.

The Globes article reports that several different electric car models will be arriving in Israel for extensive test trials. These include the GM Chevrolet Volt (which is actually a hybrid model),  a “plug in” version of Toyota’s Pruis hybrid model; and also models from China; as well as the Renault Fluence model that is being ordered by Better Place. The battery chargers for these cars will be very expensive; and may suffer from technical “teething” problems after being installed, according to Globes.

But one of the main problems, the article goes on, will be the cost of the cars themselves, due to Israeli tax authorities not yet being willing to allow a substantial deduction in the tax scale for these cars. This fact is even though the cars will be significantly more environmentally friendly than cars burning fossil fuels current tax regulations will result in the price of these cars being very high, and in the neighborhood of NIS 200,000 each or around $ 55,500 USD at current exchange rates.

Israeli tax structures for motor vehicles have always been very high; and usually result in  even a small compact model with a 1,600 cc engine costing as much as 100% more than an equivalent car in North America or the UK. Hybrid models enjoy a slight tax reduction of around NS 15,000 or US$ 4,200 which still puts the costs of these cars above gasoline driven models.

The bottom line on the eventual success of total electric or emissions free vehicles will be a combination of lower operating costs and a much lower purchase price for people shelling out the money to buy one. This means that the Israel Finance Ministry, who impose the taxes on cars, will have to be willing to give up some of the revenues that are generated by levying such high taxes on cars – whether total electric or hybrid.

Only then will the average car buyer be willing to switch their fossil fuel burning models for total electric “plug in” ones.

More articles on electric cars and their infrastructure:

Better Place “Smart Grid” to Solve Storage Issues

Better Place Gets a “Charge” With GE Partnership

Turning Another Nissan “Leaf ” in the Middle East

Denmark Prepares to (Slowly) Enter the Electric Car Network

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2 thoughts on “Will Israel be a Leader in Introducing Electric Cars? Ask the Tax Man!”

  1. Maurice says:

    Yes, this is one of the issues dealing with electric cars everywhere; i.e., how is the electricity produced that will fuel these cars, as well as disposing of the car’s lithium ion batteries once they are finally used up.

    Better Place is planning to erect its own solar power plant to provide some of the electricity for their cars, and as more solar energy plants come into use, there will be less dependence on power plants using fossil fuels.

  2. matathiahu kones,architect-ecoplanner says:

    electric cars are not good for countries that produce their electricity from mainly fossil fuels(such ISRAEL) which contribute directly to the planets greenhouse gases production and the planet’s overheating!they’re good for car production companies’ profits production!these companies should try more creative alternatives such as hyvrid and fuelcell vehicles or other…

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