Electric cars to drive Israel to energy independence

Israel is expected to provide favorable environment for companies which are planning to roll out electric cars.

Israel, a small nation in the Middle East region, stretches to a length of 290 miles and maximum width of 85 miles. With a population of about 7.5 million, habitation in Israel is mostly confined to cities such as Jerusalem, Tel Aviv, Haifa, Beersheba, Ashdod, Rishon LeZiyyon, and Eilat. Its economic growth ranged 5 percent to 6 percent in the past few decades.

With the economic development and corresponding improvement in transport infrastructure facilities such as roads, railways, and airways, motor vehicles ownership increased from a little 22 per thousand in 1950 to more than 300 by the end of 2009.

Rising motor vehicle numbers led to sharp increase in fuel consumption, making the country more dependent on other oil rich countries for its energy needs. Though situated in the Middle East region, Israel mainly depends on the imports for its energy requirements. More than 90 percent of the fuel needs is met from imports from other countries. Its per-capita energy consumption is also one of the highest in the world. The country aims to be oil independent by 2020.

Further, the rise in fuel consumption is leading to increase in harmful emissions into the atmosphere, with green houses gases emissions growing at the rate of 1 percent annually. The energy industries and road transport contributes significantly to the environmental damage caused by the country.

In order to address the above two great challenges, Israel is one of the earliest nations to take measures to promote electric cars. The government of Israel aims to boost the electric car segment with the private sector participation. In one of its major initiatives, Israel partnered with Better Place, a start-up company involved in building ecosystem for electric cars adoption, to establish charging stations and battery swapping for the electric cars. Partnering with Renault-Nissan alliance, Better Place plans to have 100,000 electric cars on Israel’s roads by 2011.

Besides, Israel has adopted tax exemptions and subsidies to fast increase the adoption of electric cars. The country is also considering to hike import duties on gasoline-powered cars in a bid to discourage their usage. Countries like Japan, South Korea, Germany, United Kingdom, Turkey, Italy, Spain, and France are the main suppliers of passenger cars to Israel.

Israel made some significant changes to the tax system under the name ‘Green Taxes’. These taxes which came into effect from August 1, 2009, offered tax exemptions on the purchase of the cars based on the emissions levels. Zero-emissions cars are levied 10 percent sales tax till 2014 while hybrid cars carry 30 percent sales tax till 2012. Further, sales tax is proposed at 30 percent on zero-emissions cars during the period 2014-2019. Currently, conventional cars are levied 80 percent sales tax compared with electric cars. Chinese BYD Auto, which is regarded as the world’s first mass producer of electric cars, plans to export the cars boosted by the tax incentives in Israel.

However, Israel where average distance between the urban areas is less than 100 miles and about 90 percent of the car owners driving about 45 miles a day, the country is well suited for the growth of electric cars. Also, the country generates a large amount of renewable energy from solar power which is helpful in further reducing the any indirect emissions from electric cars.