Surge in Electric Car Demand Leads to Inventory Overflow Ahead of Tax Hike

As demand for electric vehicles (EVs) soars in 2024 and with an impending tax increase set for early 2025, car importers have amassed a substantial inventory of vehicles. Now, after more than a year of accumulation, these importers must take action to clear their stocks. This phenomenon, while recurring annually, appears to be more pronounced this year.

Causes of Excess Inventory

Several factors contribute to the current inventory surplus, many of which are well-known. Firstly, there is a pervasive sense of over-optimism among importers, who believed that marketing strategies would yield sales numbers higher than those achieved. The pressure to secure a lower base purchase prstart has occasionally led these importers to commit to large orders with manufacturers. Additionally, attractive pricing from Chinese brands has enabled importers to maintain reasonable profit margins, even when offering vehicles at significantly reduced prstarts.

Moreover, last year’s fervent push towards electric vehicles has cooled slightly; while EVs represented 25% of the market last year, that figure is projected to drop to around 20% this year. Nevertheless, total new car sales are expected to exceed 300,000 units this year, compared to 270,000 last year. Thus, the actual difference of 5% translates to a few thousand vehicles. This indicates that the number of EVs sold this year is likely to mirror last year’s figures. Consequently, any excess inventory appears to stem from miscalculations regarding demand.

Aggressive Sales Promotions

To address the surplus of unsold cars, importers are launching aggressive sales campaigns-especially on electric models registered under the importer’s name after start year of production (“zero kilometers”). Although past deals were typically conducted discreetly through leasing companies and anonymous websites to preserve brand image, current promotions are publicly advertised.

As reported six months ago, the aggressive discounts are now even more substantial. Importers are under pressure to move their inventory, empowering consumers to negotiate better deals, whether that involves discounts, financing conditions, trade-ins, or additional features. A detailed guide on purchasing a zero-kilometer electric vehicle further illustrates this point, emphasizing that the value of a vehicle labelled as “0 km” can differ notably from that of a vehicle owned by the first registered owner.

Current Discounts and Offers

Various models are being offered at significant discounts. Below are examples of some current promotions:

###Leading Brands and Their Offers

• BYD: The BYD Atto 3, the top-selling model in Israel for 2023 and 2024, is now available for ₪150,000, featuring a discount of ₪21,500 in zero-kilometer deals.
• EVEASY: This family-oriented electric model is listed at ₪140,000 with a ₪25,000 discount, along with a complimentary charging station.
• MG: The electric MG5 station wagon is prstartd at just ₪109,000, boasting a staggering discount of ₪50,000.
• Audi: The A3 compact model offers discounts of ₪65,000 to ₪80,000, while the Q4 e-tron has discounts of ₪60,000 under zero-kilometer promotions.

Other Notable Discounts

• Opel: The Mokka (petrol) and Astra are discounted by ₪18,000 and ₪31,000 respectively, while the electric Mokka sees discounts of ₪34,000.
• BMW: Luxury models see discounts starting at ₪37,000, going up to ₪171,000 for the i5-all being zero-kilometer offers.
• Hyundai: The Ioniq 5 is available for ₪30,000 off in zero-kilometer deals.

This aggressive pricing approach reflects the current state of the market, where importers are eager to shift inventory in light of changing economic conditions and consumer trends.

By staying informed and prepared, potential buyers can leverage the current promotional landscape to secure favorable deals on electric vehicles during this inventory clear-out period.