The Israeli state-owned factory at the Israeli Defense Force's Tel Hashomer base will continue to produce the Merkava IV. The external threats to Israel and the need to keep a vital defense industry going outweighed the actual financial burden of producing these modern Main Battle Tanks.
While there has never an official proposal to shelve the Merkava program, most of the speculation apparently came from within the Defense Ministry, as a tactic to ward off budget cuts. The unofficial cost of each Merkava IV is $3 million and an estimated $6 billion has been spent on developing this model. Cancellation of the project would have caused an estimated loss of 6,200 jobs at 220 firms and factories producing components.
So why spend the money, when the IDF is actually reducing the number of armor units they field? Ultimately, it would probably cost Israel more to shut down the line and then play catch-up later on when the next crisis appeared on the horizon. While earlier tank hulls upgraded to Merkava III BAZ standards are about two generations beyond the most-likely armor threat to Israel, the Merkava IV technology better positions the Israelis for whatever technological improvements the first quarter of the 21st century will see.
Furthermore, one simply has to look at Egypt's actual acquisition of more Abrams MBTs, Syria's continuing interest in T-80 style tanks and the proliferation of modern antitank guided missiles (like the Russian 'Kornet') to realize that the Israelis intend to build a small number of units equipped with Merkava IVs and III BAZs as their regional ground-force counterbalance. - Adam Geibel