Ministry Mulling Subsidies to Win Electric-car Plant for Israel

The Ministry of Industry, Trade and Labor badly wants high-tech entrepreneur Shai Agassi to make electric cars in Israel. So badly, that minister director-general Gabriel Mimon means to offer hundreds of millions of shekels in government grants to support the project, over which several countries are vying.

The talk with Mimon follows a meeting between Agassi and Industry Minister Eli Yishai earlier this week. Agassi reviewed project goals, saying that the car's research and development is expected to be carried out in Israel, whereas production would probably be outsourced to another country. Many countries want to host production and were offering sweeteners.

During their meeting, Yishai and Agassi discussed the feasibility of production in Israel, as well as the benefits the government will be asked to provide to this end. Sources in the know say Agassi told Yishai that all 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. He 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 kilometers.

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.