Tesla Israel country manager Itay Raved is trying to enlist Minister of Transport Miri Regev to fight the Ministry of Finance’s plan to hike purchase tax on electric vehicles. A letter sent by the Raved to Regev, which was seen by “Globes,” says the car importers are planning to fight the tax increase.
In his letter, Raved reminded Regev of her visit to Tesla’s factory near Berlin, and writes, “Since then, we have been in close professional contact with officials at the Ministry of Transport and are succeeding in promoting a beneficial policy that positions Israel with the rest of the Western world in everything related to the transition to advanced, environmentally friendly electric vehicles.”
He notes that since 2022, purchase tax on these vehicles has increased from 10% to 45%, and that as a result, there has been a significant decline in purchases of electric vehicles. Raved adds, “These days, about two months before the end of 2025, it is still unknown what the purchase tax rate on electric vehicles will be for 2026 and beyond. If the government does not take any active steps, the purchase tax will jump on January 1, 2026 to a rate of 83% , and this is in clear contradiction to the public interest in promoting the green revolution and the commitments of the State of Israel.”
“The market is unable to cope”
He also mentions that in a discussion in the Knesset Finance Committee last June, a representative of the ministry demanded that the tax should not be increased until at least 2028, but the demand was not agreed to by the Ministry of Finance. “The market is unable to cope with another price increase, for the fourth year in a row, and this is only a year after the tax jumped 10%,” he writes.
In June, the Finance Committee decided that the benefit in the law for purchasing electric vehicles would be extended until the end of this year, at which time the purchase tax was already supposed to rise to 83%. The move to bring tax on electric vehicles in line with combustion engine cars was part of a larger package formulated by the Ministry of Finance, which was intended to cool the purchase of private vehicles – and a $0.15 per kilometer tax was also supposed to be imposed on electric vehicles, to make it less worthwhile to buy and drive these vehicles, which are much cheaper than public transport.
If the kilometrage tax had come into effect, journeys in an electric vehicle would still be cheaper than a fuel-powered vehicle, but the gap would have narrowed. Professionals have argued over the years that the tax breaks and the cost of using an electric vehicle discourage a shift to public transport. Although these cars pollute less, the dependence that the benefits maintain on the use of private vehicles has widespread economic consequences in terms of road accidents and loss of time and damage to productivity as a result of traffic congestion. It has also been argued that this is a revolution that is not essentially as “green” as car manufacturers and importers boast, because it perpetuates the existing situation in which Israeli roads are among the most congested of OECD countries.
Published by Globes, Israel business news – en.globes.co.il – on October 28, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
