Riyadh's EV dream may encounter obstacles and difficulties as it moves forward

Dew Briefs:

Riyadh has invested significant funds in its efforts to become a leading center for electric vehicles.
The city has faced challenges such as limited infrastructure, skilled workforce, and access to raw materials.
Riyadh aims to close the gap and compete globally in order to benefit from the lucrative opportunities in the emerging electric vehicle industry.
The Public Investment Fund (PIF), Saudi Arabia’s $700 billion sovereign wealth fund, aims to increase its annual production of EVs to 500,000 by 2030, surpassing the previous target of 150,000 by 2026.
Despite opening its sole auto factory in September 2023, Saudi Arabia has only managed to reassemble approximately 800 vehicles by December of the same year, using kits imported from Arizona.
Previous attempts by Saudi Arabia to attract automotive manufacturing have been unsuccessful.

NEED LOCAL INDUSTRY FIRST

Hyundai and the PIF partnered to build a factory in Jeddah for producing internal combustion engine and electric vehicles.
Hristova said this initiative alone wouldn’t convince manufacturers to localize.
Ceer will get components, including batteries, from BMW in Germany.
Lucid’s VP mentioned Saudi Arabia needed critical suppliers and their plant focused on reassembling cars from Arizona.
Executives believe Lucid’s strategy could encourage other companies to establish reassembly sites in Saudi Arabia.
However, this approach may hinder local manufacturing as the country would still import foreign-made cars.
Saudi Arabia objected to stronger language on phasing out fossil fuels during UN climate talks.
The kingdom aims to improve sustainability and showcased Lucid cars at conferences.
Saudi government committed to buying up to 100,000 vehicles from Lucid over the next decade.
The Saudi Industrial Development Fund provided Lucid with a $1.4 billion interest-free loan in 2022 for the factory construction.
Sultan says PIF’s investment in Lucid is driven by strategic relationship and automotive ecosystem development in Saudi Arabia.
PIF did not respond to Reuters’ request for comment.
Saudi officials want kingdom to be EV battery manufacturing hub.
Saudi Arabia needs access to raw materials, including lithium.
Khalid Al-Mudaifer says Saudi aims to produce lithium, but no reserves announced.
Maaden CEO says efforts to extract lithium from saltwater still in pilot stage.
Wilt acknowledges need to source EV battery materials from outside kingdom due to automotive plant construction timeline.
PIF launched Manara Minerals with Maaden to secure minerals internationally.
Industry executives believe Saudi Arabia has financial resources to become major player in EV industry.
Andy Palmer highlights PIF’s significant resources as reason not to underestimate their potential.

Diver treasure:

Toyota rejected a deal in 2019 due to reasons such as high labor costs, lack of local suppliers, and a small local market in Japan.
The transition away from oil-fueled cars poses challenges for Saudi Arabia, including intense competition and the need for established supply chains.
Gaurav Batra, EY’s global advanced manufacturing and mobility analyst, highlights the need for various factors to align before the industry can flourish in Saudi Arabia.
China currently dominates the new supply chain and electric vehicle (EV) production.
BYD, a Chinese company, surpassed Tesla as the world’s largest EV maker in 2019.
The Inflation Reduction Act in the United States aims to direct significant investments into EV manufacturing and creating a lower carbon economy.
Saudi Arabia faces challenges in attracting auto-component producers due to the absence of a significant local industry.
The domestic EV manufacturer Ceer, a joint venture between the PIF and Foxconn, plans to launch a car by 2025 but has yet to establish its factory.
Analysts express skepticism about early results and the feasibility of high local production numbers without significant exports from the region.