Tesla is finally coming to Israel

Tesla Model 3 Israel

In mid-November 2019 Tesla Motors registered a wholly owned Israeli subsidiary and began the process of breaking into the Israeli market. Meetings were set with the Israeli ministries of transportation and energy and a spate of hiring began in Tel Aviv. Yet with such a small market, many wonder if demand will justify Elon Musk’s most recent move.

Often compared to the late Steve Jobs, CEO Elon Musk has been labeled by many as the eccentric genius responsible for the company’s success. Despite early production issues at Tesla’s Gigafactory 1, Musk managed to transform the promise of a product into cash, selling preorders for vehicles sometimes years in advance of the actual delivery date. In many ways, the stock price of Tesla Inc. still reflects this attitude: even with negative earnings every quarter going back to 2012, a single share of TSLA will set you back nearly $350 as of the release of this article.

For many, this flouting of convention is reason enough to explain Tesla’s interest in the relatively small Israeli market. However, examining the company’s record in the Israeli registry of companies reveals Tesla’s wider aspirations “to develop, own, operate, purchase, sell, maintain, plan, engineer, obtain, build, install and order fixed energy storage systems, and energy generation systems and equipment (whether directly or by setting up special purpose entities formed for the purposes of maintaining assets as mentioned.)"

In other words, renewable energy.

For a country struggling with poor air quality and covered in abundant, nearly year-round sunlight, Tesla’s proposition takes on new life. Israel, which has struggled to meet the 2020 renewable energy goal set by the Ministers' Committee on Social and Economical Affairs, is a market ripe for just this sort of technological investment. With new corporate tax exemptions for renewables passed by the Knesset in 2017, a market already familiar with the idea of sticking unsightly sun powered water heaters on every rooftop, and a climate highly favorable to solar energy, Tesla stands poised to dominate the Israeli market.

If it can navigate the byzantine Israeli bureaucracy of course.

Certainly, if anyone could pull off such a move, it would be Musk. Year over year, Tesla’s US sales continue to grow, increasing by 280% between 2017-2018 and taking 77% of the electric vehicle market for 2019 despite lacking a single dealership. Foreign sales appear to be strengthening as well, with the Tesla Model 3 moving to the 11th most popular car in Europe and the Chinese market seeing double digit growth.

All of this of course bodes well for Israel, which hasn’t exactly seen the local innovation in this field that is generally characteristic of the “Start Up Nation”. Some will remember the now bankrupt Better Place, an Israeli company valuated at several billion dollars that sold fewer than 1,000 electric cars, despite CEO Shai Agasi’s expectation of 100,000 EVs on Israeli roads by 2010. Whether it was a matter of being too early to the table or simple mismanagement remains to be seen.

Regardless, if successful, the ripples from Musk’s venture will be far reaching. Reliance on foreign oil remains a strategic vulnerability within Israel, and studies into high levels of cancer and low birth weights linked to pollution in Haifa have not been confidence inspiring for the residents. If Musk can find success where Shai Agasi failed, it is certain that the face of Israel will be changed, but where the dice will fall remains entirely in the air.