Trade Ministry Weighs Production of Electric Car in Israel

In exchange, businessman Shai Agassi will give hundreds of millions of shekels in grants.

Gabriel Mimon, the director general of the Industry, Trade and Labor Ministry, plans to meet shortly with businessman Shai Agassi to consider the possibility of manufacturing Agassi's electric car in Israel, in exchange for hundreds of millions of shekels in grants.

The meeting with Mimon came in the wake of what was described as a "private" meeting between Industry, Trade and Labor Minister Eli Yishai and Agassi.

During the meeting, Agassi reviewed project developments, noting that the car's research and development is expected to be carried out in Israel, whereas production will likely be outsourced to another country. He said that a number of countries are interested in hosting the production, and had even offered an array of benefits, including investment grants.

But Yishai emphasized the importance of production remaining in Israel. During their meeting, the two discussed the feasibility of production in Israel, as well as the benefits the government will be asked to provide to this end. According to sources, Agassi told Yishai that everything depends on state assistance, which is an expression of Israel's willingness to shoulder some of the risk associated with establishing a factory here. Nevertheless, the sources added that Agassi did not formally ask for government funding to finance a production plant in Israel. Agassi did, however, mention the size of government grants offered by other countries, which, according to the sources, are substantially less than the $500-$600 million Intel has received.

In subsequent meetings, top ministry officials will ask for documented details of the benefits Agassi has been offered by other governments to attract the production facility. In addition, the parties will discuss questions relating to the project timetable and the feasibility of preparing Israel's infrastructure for production of electric or hybrid cars (which combine electricity and gas engines).

A number of countries have also expressed their willingness to host the test operation of the electric car Agassi is promoting. The test will be conducted with funding from the Ofer family's Israel Corp., which has undertaken to invest $100 million in the project. The test involves establishing a broad infrastructure for recharging the car, which can travel a maximum of 200 km.

Car manufacturers have begun producing hybrid cars in recent years, and the waiting time for new orders is currently about 5 months. Manufacturers note that the decisive factor in the sales of hybrid and electric cars is the rising price of gas, rather than environmental protection issues.

A number of other attempts are being made to develop yet additional alternatively powered vehicles, including using biotechnology power. Powering with bio-fuel produced from such foods as corn has garnered much criticism over the past year, and is considered one of the central factors in rising food prices and food shortages around the world.