Skip to main content

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.

www.sba.tax

Labels:

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

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more

Tariffs on UK electric cars.

  The European Commission has confirmed that it will continue with its plan to impose tariffs on electric cars exported between the UK and EU starting next year. This is due to the "rules of origin" requirement that mandates EVs traded across the English Channel to have 60% of their battery and 45% of their parts sourced from the EU or UK or face a 10% tariff. A senior Commission official, Richard Szostak, recently informed parliamentarians from the UK and EU that the bloc's battery investment has significantly declined, making the tariffs necessary to encourage domestic production. In 2022, the EU's share of global investment in battery production shrank from 41% to only 2% after the US offered substantial subsidies through its Inflation Reduction Act. Starting in 2024, car manufacturers in the UK will need to have 22% of their sales come from zero-emission vehicles, which means they may need to import EVs from the continent to meet this requirement. If EU carmakers ...
Post a Comment
Read more