Land of black gold to electric power: How and why Saudi Arabia is embracing EVs

Oil propelled Saudi Arabia from a nomadic region to a wealthy country but at a time when electric mobility is gathering pace, there is a significant s
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Saudi Arabia has around 20 facilities for vehicle manufacturing and related processing works. Local manufacturing of EVs could bolster these numbers.
Saudi Arabia has around 20 facilities for vehicle manufacturing and related processing works. Local manufacturing of EVs could bolster these numbers.

The year was 1938 and it was the third month on the calendar when something massive happened in barren fields of Saudi Arabia's Dammam. A Saudi Bedouin would help an American geologist discover the first proven oilfields in the country and the world would never be the same again. Saudi Arabia prospered at lightning speed with its royal family now among the richest in the world. But while oil has powered mobility for decades, what does the mammoth switch to electric power now mean for the Islamic republic, its rulers and its people?

Saudi Arabia is one of the world's largest exporters of oil with an estimated capacity of 11 million barrels per day. Not only does it have huge reserves but the capability to extract and export. Countries like China, Japan, South Korea, India and the United States are major customers. And a big share of the oil brought goes into the mobility and transportation sectors across the world. But with a green revolution in motion as far as personal mobility is concerned, the Saudis know times are changing. And changing fast.

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According to International Trade Administration, Saudi Arabia is looking to generate around 50 per cent of its electricity from renewable sources like wind and solar by 2030. The other 50 per cent would be generated from gas. In September of last year, five new renewable energy projects were announced. This is massive considering the country still has mammoth oil reserves. All of these are part of what is called Saudi Green Initiative or SGI which also envisions planting of 10 billion trees and recovering 40 million hectares of degraded land in the coming decades. But what is the link to electric cars?

From guzzling fuel to charging forward

Saudi Arabia
Sales of all passenger cars - regardless of powertrain - is expected to grow at a compound annual rate of 24 per cent by 2025.
Saudi Arabia
Sales of all passenger cars - regardless of powertrain - is expected to grow at a compound annual rate of 24 per cent by 2025.

Automotive fuel is one of the cheapest in Saudi Arabia but this has been obvious for a long time. A litre of petrol is around 2.330 Saudi Riyal or approximately $.62 or 51. But there is a change of tectonic proportions that is underway within the country.

Saudi may seem like the last place on Earth where EVs would make presence known. But the charge has already begun with demand for battery-powered mobility options not only taking birth but now on the rise. According to a survey commissioned by General Motors, nearly two-thirds of local Saudi population who already own at least one vehicle is ready to explore EVs. The survey also found that a huge number of people - 93 per cent - are aware of EVs which could be piquing interest and powering demand.

The Saudi government has also started establishing and expanding charging infrastructure to support EVs which, in turn, could further boost adoption. The Saudi Electric Vehicle Charging Infrastructure Development Initiative or SEVCIDI has a stated objective of establishing 50,000 charging stations here by 2025. All of this with the goal of reducing carbon footprint.

Opting for options

Saudi Arabia has around 160 vehicle plants but most are directed towards manufacturing of final products or components that have very little to do with electric powertrain. But that does not mean that the local population does not have EV options at present.

Home-grown EV manufacturer Ceer was established in 2022 as a joint venture between Saudi Arabia’s Public Investment Fund (PIF) and Taiwanese manufacturer Foxconn. The stated objective of Ceer is to design and manufacture electric vehicles - from sedans to SUVs - for Saudi customers as well as those in neighbouring countries.

The country's Ministry of Investment has signed a $5.6 billion deal with Chinese electric car maker Human Horizon in order to develop, manufacture and sell EVs here.

Global players like Tesla, BMW and Hyundai have also driven in their respective all-electric models which have mostly been received well by potential customers. Last year, US-based Lucid Motor - backed by Saudi's Public Investment Fund - signed an agreement to sell one lakh units here.

It is also reportedly becoming simpler to import electric cars into the country with simplified tax and insurance procedures.

But there are still some proverbial mountains to climb before Saudi Arabia can be counted as one of the many epicentres of electric mobility. Electricity generation, for one, will need to keep pace with the rising demand for EVs. Fast-charging points will have to be far more prevalent while the products and the supporting infrastructure will have to be taken to beyond the urban hubs of Riyadh and Jeddah. It is, however, mostly agreed that while the transition to electric mobility won't be swift here, it is and will remain significant.

First Published Date: 23 Jun 2023, 10:22 AM IST
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