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Saudis enter into EV business.

 The elec­tric vehicle ini­ti­at­ive is part of the king­dom’s ambi­tious diver­si­fic­a­tion drive to wean itself off

Electric car

its reli­ance on oil income, which is its primary rev­enue source as the world’s largest energy exporter. It intends to pour bil­lions into the project to cre­ate an elec­tric vehicle man­u­fac­tur­ing hub, with the aim of pro­du­cing 500,000 cars a year by 2030. The US-based Lucid Motors, in which Saudi Ara­bia acquired a major­ity stake cost­ing roughly $2bn, intends to pro­duce about a quarter of that tar­get in the king­dom. Saudi Ara­bia hopes the trans­ition to elec­tric will also give the coun­try a bet­ter chance of suc­cess, as the pet­rol engine mar­ket is extremely dif­fi­cult to break into because of the dom­in­ance of estab­lished car­makers in Europe, the US and Japan.

The bat­tery powered mar­ket offered a more level play­ing field than com­bus­tion, said one Saudi offi­cial, and would pit the king­dom against other big elec­tric vehicle pro­du­cers such as China, Ger­many and the US. There are some doubts over the coun­try’s abil­ity to com­pete against the likes of China with its strong elec­tric vehicle man­u­fac­tur­ing base, robust tech­no­logy, high pro­ductiv­ity and cheap labour costs. But elec­tric vehicle man­u­fac­tur­ing is planned as an import­ant pil­lar of the king­dom’s diver­si­fic­a­tion drive, which is being over­seen by the sov­er­eign wealth fund, the $600bn Pub­lic Invest­ment Fund. Elec­tric vehicle pro­duc­tion is cent­ral to the ini­ti­at­ive because the king­dom aims to take advant­age of the industry’s expec­ted expan­sion.

Elec­tric cars should make up about 60 per cent of vehicles sold annu­ally by 2030 if net zero tar­gets are to be reached by 2050, the Inter­na­tional Energy Agency says. Key to the Saudi elec­tric vehicle plan is the cre­ation of Ceer, Arabic for a drive or go, which the coun­try hopes will pro­duce 170,000 cars a year in part­ner­ship with Taiwan’s tech­no­logy group Fox­conn and BMW. Estab­lish­ing an elec­tric vehicle industry would sub­stan­tially cut the king­dom’s import bill, said Tarek Fad­lal­lah, the chief exec­ut­ive for Nomura Asset Man­age­ment in the Middle East. «Trans­port­a­tion accounts for about 15 per cent of the Saudi import bill and is the single largest con­sumer of for­eign cur­rency,» he said.

In addi­tion, the elec­tric ini­ti­at­ive fits with Saudi Ara­bia’s tar­get of 30 per cent of all vehicles in Riy­adh to be powered by bat­ter­ies by 2030 while put­ting it among the world’s top five pro­du­cers. «The point at which you could pro­duce an elec­tric vehicle for the same cost as a com­bus­tion vehicle was thought to be around 2025, but it’s more likely now that it will be towards the end of the dec­ade». The elec­tric car industry has also been hit by infla­tion and sup­ply chain bot­tle­necks of min­er­als and com­pon­ents that could dis­rupt Saudi plans. Faisal Sul­tan, Lucid’s man­aging dir­ector for Saudi Ara­bia, stressed the import­ance of the gov­ern­ment tak­ing the ini­ti­at­ive in build­ing a sup­ply chain.

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Comments

  1. Hector13 February 2023 at 10:38

    It's interesting to see a country like Saudi Arabia trying to be one of the main players in the electric vehicle market considering their petrol roots. How things are changing...

    ReplyDelete
    Replies
    1. Oliver13 February 2023 at 13:20

      Surprising to see in a way and unsurprising in other ways. They are realizing that the future is here and it waits for no one. You either are the change or at least go with it or you will be redundant.

      Delete
  2. Andy13 February 2023 at 14:56

    Building a supply chain is of extreme importance for this. Reliance of external events and countries will only lead to 2030 becoming 2040 and so on.

    ReplyDelete

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