Nothing new but wanted to update some of the info here.
First a good read from Jan 2026:
https://euro-sd.com/2026/01/articles/armament/48600/the-carmel-programme-recent-developments/
Carmel is not a full AFV program. It never was. It was a tech demonstration program. The weird tankette illustrated in 2017 was actually the 3x M113 based demonstrators in 2019.
Companies Rafael, IAI, and Elbit were tasked with a tech demonstration of a next generation AFV. It was not supposed to directly mimic an MBT or an IFV. It wasn't built to conform with an existing doctrine.
Once the tech demonstration was complete and IAI won the contract for the next phase, the program splintered into the specific AFVs.
Early iterations of the tech were used on the Eitan, Namer 2, and Barak (Merkava 4).
Of these, the Merkava was in most need of replacement.
Eitan is still a brand new design, and the internal form of the next gen APC remains similar to the previous gen. Hence Namer 2 is very much relevant for the future.
The Merkava, however, its internal layout is outdated and much can be improved. It is thought that a crew capsule would be optimal, and the smaller the better.
That is why the main component of the Carmel program was a demonstration of a 2 man capsule.
Some videos show 3 men, which is actually more relevant to how an APC/IFV operates.
As of right now Israel is right before elections (25 Oct), and the war has also delayed many low priority programs.
Quite likely by end of 2027 we may hear some news about a program to replace the Merkava (and Barak), but that won't be called Carmel.