US-based electric carmaker Tesla (Nasdaq: TSLA) is entering the Israeli vehicle market in January, as first reported by "Globes." Next month, Tesla will open a pop-up store in the Ramat Aviv mall in North Tel Aviv.
A month ago, Tesla registered a fully owned subsidiary company in Israel - Tesla Motors Israel Ltd. and earlier this month, Tesla advertised for a country manager in Israel and sales manager. Now comes the news that Elon Musk's electric car giant will open up a pop-up store in the Ramat Aviv mall, enabling shoppers from the surrounding affluent Tel Aviv suburbs to be the first in Israel to register for a new Tesla car.
Tesla's global expansion includes entering Europe with its Model 3 vehicles, which include relatively compact cars. In September 2019, Tesla sold 17,490 cars from this series, which made it the best-selling electric car worldwide in that month. This year Tesla has sold 75,000 cars in Europe and is continuing to enter smaller markets like Israel due to strong customer demand. Tesla began selling cars in Jordan three years ago.
Tesla Model 3, whose official price in the US started at $40,000, and the crossover Tesla Y, which will debut next year with a $35,000 basic price. Tesla is now beginning Model 3 production at a huge and completely new plant in Shanghai, but anyone expecting a lower price as a result of the moving of production from the US to China is in for a disappointment. In China, the "local" Model 3 is only $2,000 cheaper than the imported version, despite the customs duties applying to imports from the US.
What the price for Israeli consumers will be is anyone's guess. Taking into account the price structure in Europe and the current taxes on electric cars in Israel before the upcoming January revision of taxes on environmentally friendly vehicles, which include a 10% purchase tax, shipping, and VAT, the result is a price in the NIS 200,000-220,000 range for the basic Tesla Model 3 with a 400-kilometer range. The price of the Tesla Y, which has a 300-kilometer range in the basic configuration, may be lower. This is a relatively accessible price, but it still appeals to a fairly limited segment of the Israeli market, which is crowded with electric and hybrid competitors.
Tesla's leading models, S and X, are likely to cost NIS 400,000-500,000 in Israel, which restricts the market for them to a few dozen or a few hundred sales a year. In this market, they will soon face competition from European cars made by Audi, Mercedes, Jaguar, and many others on the way.
Tesla's sales strategy revolves around inflexible pricing - a challenge vis-a-vis Israeli consumers who like discounts and special offers. Another challenge is that Tesla's showrooms are 'customer experience centers' where purchases are made online rather than from a sales representative - a novel idea in the Israeli market.
Published by Globes, Israel business news - en.globes.co.il - on December 30, 2019
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