Israel Considers Replacing Green Tax Incentive Amid EV and Hybrid Surge
Israel's Ministry of Finance weighs replacing the 2009 green tax incentive as hybrid and Chinese vehicle sales surge. Meanwhile, Israeli auto groups expand operations across Europe.
The Israeli Ministry of Finance is considering abolishing the "green tax" incentive mechanism introduced in 2009 and replacing it with an alternative environmental taxation framework. Treasury officials believe the current system has fulfilled its original purpose of encouraging the transition to low-emission vehicles, and its fiscal cost is no longer justified.
Shift in the Automotive Market
When launched, the mechanism increased the purchase tax ceiling on private cars from roughly 70% to 83%, while granting a shekel-based reduction of up to 15,000 NIS (currently up to roughly 18,000 NIS) based on a "green score" calculated from the environmental price of various pollutants.
However, significant market shifts have occurred in recent years, led by the accelerated influx of Chinese plug-in hybrid and hybrid models priced competitively against or below traditional gasoline cars. Consequently, these two segments surged, accounting for 57% of total sales in the first three quarters of 2026, rendering the tax incentives largely redundant according to the Treasury.
Data published by the Tax Authority this week show that last year, the average purchase tax for passenger cars reached 52.2 thousand NIS, significantly higher than the 44 thousand NIS recorded in 2024—a real increase of 15.2%. The average purchase tax rate also climbed to 70.7%, returning to levels last seen in 2008 prior to the green taxation rollout.
European Expansion by Israeli Importers
Meanwhile, major Israeli automotive groups are continuing to expand their footprint across Europe in partnership with Chinese brands. This month, Grand Auto, owned by Tavora Group and the Livnat family, secured the import and distribution franchise for Chery's Icaur SUV brand.
In the first phase, Grand Auto will import the vehicles to Hungary starting in the first quarter of 2027, with plans to expand to other operational markets. Grand Auto is one of Central Europe's largest automotive distributors, selling approximately 70,000 vehicles last year across countries including the Czech Republic, Hungary, and Croatia.
Concurrently, Swiss sales of Chery vehicles officially kicked off last week under Luxi Motors, owned by the Sammitr Group, which operates in several European markets including Romania and Greece. The Swiss division is managed by a former regional director for China's BYD. Furthermore, Kolmobil's Austrian subsidiary hinted this week at exploring the import and distribution of commercial vehicles and trucks in Austria, likely of Chinese origin.
