Ora’s Good Cat is the Chinese version of Ora’s Funky Cat that is marketed in Israel. A Chinese car means a car that is less designed to withstand crash tests, its finish levels are less good, the engine is weaker and many more differences. But the bottom line is that the Israeli Funky Cat, which is very similar to the Chinese version, is now sold in Israel at a price starting at NIS 137,900. And this is a “special” price for cars that Shalmomobil, the Ora importer, exempted from customs duty last year and paid a purchase tax of only 10%. Ora Funky Cat cars from the shipment that was released in 2023 cost NIS 144,000, which means that the Ora Funky Cat costs in China after the discount less than half of its price in Israel – at the “low” price.
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Ora Funky Cat. In China, the equivalent model Good Cat was discounted by 20% until the end of April
(Photo: Manufacturer)
And Ora is really not alone: during the last few weeks, almost all Chinese car manufacturers announced impressive sales promotions in China. BYD, Geely and many other good Chinese car manufacturers rushed to announce sales promotions in the Chinese market, followed by the Western car manufacturers, starting with Ford and ending with BMW, announcing a series of sales promotions, with the commonality of all these sales promotions being that they refers to the electric models. This means that the Chinese car manufacturers are stuck. In fact, according to data from the Chinese Automobile Manufacturers Association, the unsold inventory held by Chinese automobile manufacturers reached 3.41 million cars at the end of February, a 10% increase compared to last year.
What happened that the Chinese (and Western) car manufacturers suddenly find it difficult to sell the electric cars in the Chinese market? The answer lies in the reduction of subsidies, but not just any reduction. In China, the amount of the electric vehicle subsidy is determined by the driving range, meaning that the more kilometers the vehicle can travel on electric power, the greater the subsidy, which explains why Chinese plug-in hybrid vehicles are designed to travel even over 100 kilometers on electric power. The system increases the amount of the subsidy every year, with the most generous subsidy, 12,600 yuan, awarded last year to a vehicle capable of traveling over 400 kilometers on electric power.
This subsidy celebration ended on January 1, about three months ago. The assumption of the government in China was that the electric cars would be so popular that they would not need any more benefits for them. At the same time, in the last two years, a process took place in China that was also well felt in Israel: the prices of raw materials for electric vehicle batteries rose, the war in Ukraine hurt even more the suppliers of electric vehicles in China – and the vehicle manufacturers raised prices. And once the subsidies were stopped, consumers in China simply voted with their feet and stopped buying electric cars.
At the same time, another process began in China. Tesla was the first to know how to read the Chinese map, and already last December announced price reductions in China, a few weeks before the end of the subsidy. Tesla’s competing car manufacturers in China, both Western and Chinese, preferred to sit on the fence and wait for the move to pass, until it was already too late and the situation of non-addicted vehicles in China reached its peak, which at once created a wave of sales promotions in China.
Now to another country, far from China, in which a process of Tesla discounts also unexpectedly took place, indirectly subsidies were reduced in it, and it is also characterized by a large number of Chinese electric cars: Israel. The purchase tax in Israel on an electric vehicle was 10% until January 1st, and today it is 20%. On January 1st, the car importers started selling electric cars in accordance with the purchase tax, of course, but the Israelis were not really deterred, on the contrary. According to data from the Israeli Automobile Importers Association, the volume of sales in the months of January and February was very good, and the country whose production the most cars were sold in Israel was China – with 12,831 Chinese cars delivered to customers (second place is South Korea with 12,774 cars).
Apart from that, even in Israel Tesla lowered the prices of its new cars, even handsomely. It happened in the middle of January. In some cases, it is already possible to find popular Chinese electric cars whose price approaches the price of a basic Tesla 3. Then an interesting process took place in the Israeli car market: Ora, which promised 900 cars to customers “at the price of 2022”, is still selling cars from that sale. Cars that were released from customs last year are waiting at Lipmotor. Geely offers a charging station as a gift. Basically, the Israelis stopped attacking the Chinese.
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Geely Geometric C 350. Offers cars at a discount for a member club
(Photo: Tal Azoulai)
First, car importers have raised the prices of Chinese streetcars to absurd heights compared to gasoline vehicles. When a basic Volkswagen Golf costs NIS 140,000, and a basic Chinese BYD Auto 3 costs NIS 25,000 more, even a huge screen is not necessarily enough to convince customers. When a small and well-equipped Ora Funky Cat costs over NIS 160,000 “at 2022 prices”, and a large and spacious Kia Sid Station costs NIS 153,000, it is difficult to find logic in purchasing the Chinese electric car. Furthermore, even very determined customers remember that these cars were cheaper just three months ago. And among consumers there is material fatigue and an understanding that the price of the Chinese is very similar between the different models, and when a small Ora Funky Cat comes in an equipped version like a large BYD Auto 3, it is difficult to decide what to choose. Besides, the pace of technological change is tremendous. As in the world of entertainment electronics, what was new three months ago is now old.
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Tesla 3 RWD. The company started the discounting process in China. In Israel it did not have the same effect
(Photo: Manufacturer)
So why are there promotions and discounts in China and not in Israel? The answer is quite bleak and lies in the consumers in Israel. “You can’t take the people who stood in line three months ago with credit cards in hand and agreed to pay more money to speed up the delivery and own an electric vehicle and suddenly cut the price for them. This can’t happen with a Chinese brand because it’s a matter of image,” he explained to Calcalist A representative of one of the car importers. “The reputation of the Chinese is currently good, there is a very thin line of image here, and you don’t want your product to become an Ali Express car.”
Beyond that, car importers have additional considerations. The importers sold thousands of cars to the vehicle fleets, i.e. to the leasing companies. A good number of these cars were released from customs last December, and then fleets benefited from an increase in the price of these vehicles on the used market because the price went up in January. Sales promotions on the Chinese electric cars will lower their price, and of course will hurt the leasing companies. Will the car importers soon come out with promotions on the Chinese streetcars? Most likely not, because Israel is not China and the car importers have too much to lose. Until that happens, the main losers will be the consumers.
And let’s not forget, the Chinese cars being sold now were bought when the dollar exchange rate was lower, giving car importers some breathing room.