That is somewhat true. The main issue is getting out of/into the city center. For example, getting to the big tech park of tel aviv (Ramat HaHayal) can take over an hour with a bus. So people take cars, but then there's so much traffic and lack of parking, it also takes an hour. Not much for someone who lives in the US but you can essentially drive half of Israel in an hour.

It also makes visiting family , which is a big thing in Israeli culture and enabled by short distances, very annoying if you don't have a car.

Scooters and e-bikes "solved" a lot of these troubles inside the city, but infrastructure hadn't caught up - not enough bike lanes make it very dangerous and injuries and even deaths are not uncommon. The upcoming newly built intercity tram should theoretically also help.