Saudi Arabia does not quite come first to mind when talking about electric vehicles (EVs). However, the announcement in April earlier this year that US luxury EV manufacturer, the Lucid Group, will be delivering 100,000 EVs over a ten-year period as part of a deal struck with the Government of Saudi Arabia underscores the country’s commitment to transitioning to more environmentally friendly, zero-emissions transport. Deliveries are slated to commence in the second quarter of 2023. Annual orders are estimated to be between 1,000-2,000 vehicles in the initial stages before ramping up to 4,000-7,000 vehicles from 2025.
While ICE vehicles still dominate the Kingdom of Saudi Arabia (KSA), we cannot say we are surprised by this development which counts as among the biggest purchase orders for EVs to date. Today, as climate change concerns amplify, countries worldwide are stepping up the pace on more sustainable practices. It is also worth keeping in mind that the Saudi Arabia Public Investment Fund (PIF) is one of the largest investors and a majority stakeholder in the California-based luxury EV manufacturer. Most recently, on October 25th, Lucid opened its first retail studio in Riyadh in a bid to familiarize customers with its product offerings.
To learn more, please access our research reports, Global Electric Vehicles Outlook, 2022, Global OEMs’ Strategies for Electric Light Commercial Vehicle Platforms, or contact sathyanarayanak@frost.com for information on a private briefing.
Our Perspective
For a variety of reasons, the Lucid- KSA agreement represents a win-win. Across the world, EV adoption has been surging as countries pledge to address the intensifying climate change crisis through reduced carbon emissions and more sustainable strategies. The IEA states that global EV sales doubled to nearly 6.6 million in 2021, accounting for around a 9% share of the global automotive market. Simultaneously, Saudi Arabia’s fledgling EV market is slowly gaining traction as consumers look to less polluting, more environmentally-friendly forms of transport.
Such consumer trends, while still in their infancy, fold neatly into long-term Government roadmaps. Initiatives like the ambitious Saudi Vision 2030 and the Saudi Green Initiative are focused on economic diversification and sustainability imperatives.
The Vision 2030 program aims at having EVs comprise 30% of total cars in the capital city Riyadh by the end of this decade. Saudi Arabia’s National Industrial Development Center (NIDC) has been seeking to attract leading foreign automakers in both ICE and EV domains, with the goal of manufacturing 300,000 vehicles on an annual basis with 40% local content by 2030.
Meanwhile, the Saudi Green Initiative targets lowering KSA’s global contribution to carbon emissions by more than 4%. Overarching this, the Saudi Government has set a goal of achieving net-zero carbon emissions by 2060.
“In accordance with Vision 2030 and its vehicle electrification objectives, we will see strong support for domestic manufacture of EVs, with an array of incentives and subsidies aimed at attracting leading automakers to establish production facilities in the country. KSA lacks local automotive manufacturing competencies and will look to Lucid to kickstart made-in-Saudi initiatives.” – Anjan Hemanth Kumar, Research Director, Mobility Practice at Frost & Sullivan.
In this context, Lucid which has its manufacturing plant in Arizona, will be establishing its first overseas factory in Saudi Arabia. Construction work began in May this year and the factory is set to be completed by 2025-2026. It is slated to produce around 150,000 vehicles annually and create significant employment generation opportunities.
We believe that Saudi Arabia and the GCC member states will push towards a future of carbon neutrality. The quest for integrated, sustainable, and smart mobility solutions, paralleled by the need to diversify away from an oil-based economy, will underpin KSA’s move towards decarbonization.
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