I think the fact that he was going to use the new government to grant himself for immunity for impending corruption charges was a major contributing factor:

Israel’s parliament has voted to dissolve itself after Benjamin Netanyahu failed to form a government, in a move that will lead to a second round of elections just one month after the country held a national poll.

At a suspenseful gathering that ended weeks of unsuccessful bartering and brinkmanship, the Knesset voted to disperse and call new elections, set for 17 September.

Coalition talks stalled after far-right former defence minister Avigdor Lieberman, a Netanyahu ally-turned-rival, refused to back the prime minister.

Netanyahu needed support from Lieberman’s ultranationalist party, Yisrael Beiteinu, for a majority in Israel’s parliament.

………

Lieberman, whose party’s base includes largely secular Russian-speaking Israelis, wanted guarantees that the prime minister would back legislation to insist ultra-Orthodox Jews, also known as haredi, undertake mandatory national service like other Israelis.

Netanyahu, however, also needed the 16 seats from ultra-Orthodox parties for a 61-seat majority of parliament’s 120 seats. Those parties demanded that the existing exemption from conscription for seminary students stays in place.

“The Likud surrendered completely to the haredi,” Lieberman said before the parliamentary vote on Wednesday.

………

This time, Netanyahu, 69, was under additional pressure to form a government as he faces potential indictments for bribery, fraud and breach of trust in three cases. He denies any wrongdoing, labelling the accusations as a “witch hunt”.

His loyalists had been planning to grant him immunity in the next parliament. A draft law they proposed would overrule court decisions and in effect protect the prime minister, although Netanyahu has not publicly backed the plan.

I cannot but think that the plans for immunizing Bibi were giving his coalition partners some serious concerns that they would pay for giving him a get out of jail free card.