By Contributing Author
Tesla, the futuristic auto maker, has recently announced plans to establish operations in Israel. The company, founded by South African immigrant America Elon Musk, has been known for having ambitious plans of innovation and market expansion ever since the company came into being a little over a decade ago.
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After a law requiring car import companies to have 90% of its shares owned by Israelis was changed to only requiring that said company now only needs to be headed by an Israeli in order to operate, the outlook for Tesla in Israel changed. Quickly an expansion plan was formulated, and a few weeks ago, Tesla Motors Israel became a registered subsidiary in Israel. They are now poised to provide Israel with much more than electric, solar, and other solutions. Previously, this was a problematic due to the way that Tesla sells its cars and other products directly to the consumer.
Now with much hype in the air about this anticipated move, many are calculating how they can capitalize on this move. From suppliers to local marketing companies specializing in English language advertising, to international and Israeli and Americans alike investing in stocks, those in the industry are doing all they can to position themselves ideally to take maximum advantage of this new market entry.
If this move is successful for Tesla, they will have succeeded in fundamentally transforming the Israeli auto market. Because Israel is a relatively small albeit fully developed market, it has not usually the initial focus of multinationals looking to introduce a new product to the international mass market.
Marketing efforts traditionally start with the North American market, with efforts trickling to the European market and the East Asian market after a while, before heading to the peripheral markets if at all. This quite often leaves the Israeli market underserved, especially given the fact that it is a developed market with very similar tastes as that of the rest of the First World.
Fortunately, Tesla has responded to the market cries of Israel and are working tirelessly to develop their position in Israel. This is no simple venture as there are numerous governmental and local regulations needing to be hashed out first, but the wonders this will bring to the local marketplace will surely be seen in the years to come.
Benefits of Electric Vehicles
The proliferation of electric vehicles can bring about many benefits to the society that adopts this practice, some obvious and others not much so. The main benefit of this transition is usually a massive potential reduction in air pollution.
With traditional vehicles that run on gasoline, there is always the harmful by-product of not just greenhouse gases, but also pollutants such as sulfur and mercury. These pollutants are found by many studies to be in some degree carcinogenic.
With electric cars, the potential is there to reduce and even eliminate these pollutants from the exhaust fumes vehicles emit. This a very important consideration not just in general, but in Israel’s case specifically. Israel has a very high population density, which means that the emissions of their auto fleet are concentrated in an alarmingly small area.
This makes reducing air pollutants acutely important to Israel so as to minimize the negative health effects of an industrialized civilization. Shifting to a predominantly electric auto fleet will help tremendously in this regard. Not only will Israel be able to meet any international climate treaties it has signed up for, but the standard of public health can be raised substantially.
Now, this would mean next to nothing if the electricity produced in Israel came from sources even dirtier than gasoline and diesel. Fortunately, the majority of Israel’s energy mix comes from natural gas, which is the cleanest burning of any hydrocarbon category. Having this energy mix enables Israel to take advantage of electric vehicles not just to modernize their auto fleet, but also to increase overall air quality.
Implications for the Israeli Auto Market
If successful, this transition towards an electric auto fleet will pose many challenges to Israel that, if embraced and adequately addressed, would lead to a dramatic transformation of Israeli infrastructure. This is simply due to the different infrastructural needs of an electric auto fleet vis-a-vis a hydrocarbon one.
The greater the share of electric vehicles, the more petrol station will lose business and close down one by one. Conversely, the popularity of electric charging stations will increase in tandem. In order for this to become a reality, someone is going to have to install this electric charging capacity across the country in order to service the needs of the transforming auto fleet.
A massive investment in this new infrastructure will have to be done by the private sector, public sector, or both. The biggest hindrance to this will be political and social in nature instead of economical. Israel has deep pools of capital to draw from, not just locally but from the diaspora. What needs to be overcome is the natural reluctance of humans to change.
The fear of the upfront cost of this change will be primarily driven by fear of the unknown. For better or worse, humans obey Newton’s Second Law quite well, resisting change and needing to be given a push.
Investing for the Future
Many have said that the future has already arrived, and as you peer out to see how the world is innovating daily, you would not be blamed for agreeing with this assessment. The proliferation of increasingly sophisticated technology has led to an innovation boom many have compared to that experienced during the industrial revolution.
Many will certainly do what they can to hold on to their old ways. While understandable, there are some things that are simply inevitable. The relentless march of technological progress appears to be unstoppable. As such, people and businesses will face the choice of embracing these changes or being left behind.
Ultimately, nothing is perfect. While there will almost certainly be pitfalls, the net result of this technological wave has been and most likely will continue to be positive. It will be very exciting to see what changes the future will bring, especially in the Israeli auto industry.