Tesla Enters Israeli Market, Prices Lower Than Expected

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Tesla CEO Elon Musk at an opening ceremony for Tesla China.
Tesla CEO Elon Musk at an opening ceremony for Tesla China.Credit: ALY SONG/ REUTERS

Tesla, the American electric car corporation owned by billionaire Elon Musk, started a soft launch in Israel on Tuesday. The company’s new Hebrew website invites customers to order cars for delivery in March.

The prices look surprisingly low, starting at 180,000 shekels ($54,600) for a Tesla 3, the company’s family-sized standard range make. That figure is far less than what was expected. The price for Model S, the high-performing sedan, will start at 420,000 shekels ($128,000) and will be available only from November. The prices reflect the latest editions of the two models, which were announced last week.

In its price listing, Tesla has taken an interesting approach, probably meant to point out the high rate of tax on Israeli cars. Prices are listed both with and without taxes. Thus, the short-range Model 3 (the most basic model Tesla offers) is listed to show that the sticker price includes 10,000 shekels in taxes. The Model 3 costs $37,000, or 122,000 shekels, in the United States. Tesla also notes the estimated fuel savings of 23,600 shekels over a five-year period.

Taxes are felt even stronger among the more expensive models (like the long-range Model X). The base price of the X is 335,000 shekels ($102,000), but after taxes it’s 447,000 shekels ($136,000). The company notes that estimated fuel savings will amount to 59,000 shekels over five years. The X costs $88,490 in the United States, $83,000 before taxes. The top of the line “Plaid Plus” Model S, which accelerates from zero to 100 in under two seconds, will start at 740,000 shekels ($225,000).

The range of the models vary from 448 kilometers for the Model 3 up to 837 kilometers for the Model S, whose owners will likely almost never have to charge their cars away from home.

A Tesla Supercharger station.Credit: REUTERS/Arnd Wiegman

The company announced last month that it would place charging stations in Tel Aviv, Haifa, Eilat and Be’er Sheva. Now, it says the first fast-charging stations, which will serve solely Teslas, will be in Tel Aviv and Haifa. Additional stations will be added later to allow longer drives around the country.

Tesla is not going after the luxury market but rather mainstream brands like Hyundai, Mazda and Skoda, and it will force electric car importers and the other players in the market to change their strategy to compete with the new, interesting kid on the block.

Still, Tesla models aren’t cheap. The price of most cars coming to Israel will be over 300,000 shekels ($91,000), industry analysts believe, which incurs a 20% luxury surtax. Prices in Israel will be more than they are in Europe or the United States, where models are sold in the $50,000-$70,000 range.

Tesla received approval to be an official exporter to Israel around a month ago. It started the process to enter the Israeli market two years ago, announcing in November 2019 that it had recruited a CEO for the center it would set up in the country, but that arrangement fell through shortly thereafter. This development and the outbreak of the coronavirus pandemic caused further delays. Its company executives in Israel remain anonymous.

Tesla recently acquired a service center in Petah Tikva, that was designated for Mazda and Ford automobiles, and branded it as its central service center in Israel. In parallel, it started signing contracts to place fast charging stations it calls Superchargers in Haifa, Tel Aviv, Be’er Sheva and Eilat.

Several electric car models entered the local market last year, including Peugeot and Chinese manufacturers GAC and MG. The biggest selling electric car in Israel in 2020 was the Chinese MG SV ZEV (636 units), followed by the Audi e-tron (330 units), according to data provided by BDO to the automobile importers association.

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