At this year's World Economic Forum in Davos, Saudi Arabia's Minister of Investment, Khalid Al Falih, announced the establishment of three EV production facilities in the Kingdom. While local production will initially serve domestic demand, in the medium- and long-run, the majority of Saudi-manufactured EVs could be exported.
Over 1 million electric vehicles until 2030
To date, the number of EVs (fully electric and hybrid plug-in models) registered in Saudi Arabia is estimated at only a few hundred, but the Kingdom’s targets are very ambitious. In the capital of Riyadh the EV share is targeted to rise to 30 percent by 2030. According to official estimates, the current count of 2.7 million vehicles on Riyadh’s highways is expected to exceed 3 million by 2030. To achieve a target of 30 percent, the EV share in Riyadh alone would have to rise to over 1 million.
“ The share of electric vehicles is targeted to rise to 30 percent by 2030 in the capital of Riyadh. ”
SASO issues licensing regulations
In 2017, the Saudi Arabian Standards, Metrology and Quality Organization (SASO) banned the import of electric vehicles (EVs) due to the lack of a legislative regulation of the import. The first licensing r e q u i r e m e n t s were released in early 2018, with the publication of the "Technical Regulations for Electric Vehicles”, applying to EVs up to 3.5 tons and maximum speeds from 25 kilometers per hour. However, commercial import of EVs remained prohibited until 2020. According to a 2021 study, the number of cars will rise to 16.5 million vehicles nationwide by 2030. Hence, an EV share of 5 percent would require 800,000 EVs; a 30 percent share 4.9 million EVs. Most forecasts expect the amount of EVs to range between 1 million and 2 million in 2030.
LUCID MOTORS constructs EV-manufacturing facility
Saudi Arabia has long sought to establish a local automotive industry. Now the California-based EV manufacturer Lucid Motors is setting up a manufacturing facility in King Abdullah Economic City (KAEC; 120 kilometers north of Jeddah).
Saudi Arabia's state-owned Public Investment Fund (PIF) holds a 63 percent stake in Lucid Motors. In February 2022, Lucid Motors signed agreements with the Ministry of Investment, Saudi Industrial Development Bank, KAEC (Emaar-The Economic City) and Gulf International Bank (GIB) to implement the manufacturing facility. The PIF holds a stake of over 97 percent in GIB. Over the next 15 years, Lucid Motors will receive financing and investment incentives of up to $3.4 billion (US$).
In May 2022, Lucid Motors awarded a US$640 million contract to build the EV plant to local construction company Al Bawani. Construction is targeted for completion in 2025 or 2026. Initially, kits (CKD or SKD) of the "Lucid Air" model supplied from the USA will be assembled. There will then be a gradual increase in local value addition. The production facility will have an annual capacity of up to 150,000 vehicles. Lucid Motors was founded in 2007 and has been producing EVs in Arizona since 2021 with selling prices ranging from $87,400 to $179,000 each. The company in February lowered its 2022 production target from 20,000 vehicles to 12,000 to 14,000. In April 2022, the Saudi Arabian government signed a contract with Lucid Motors to purchase 50,000 vehicles over ten years, including an optional addition of 50,000 vehicles. Annual deliveries of 1,000 to 2,000 vehicles are planned for 2023 and 2024. Starting from 2025, annual deliveries of 4,000 to 7,000 are planned.
Local development of an electric vehicle launched
Taiwan's Foxconn Technology Group and PIF set up a joint venture to develop and produce electric vehicles under the name "Cheer" in Saudi Arabia. Foxconn would supply the vehicle's software, electronics and electronic architecture. The electric vehicle will use an old BMW platform.
Battery production under consideration
The PIF wants to build a factory for EV batteries with an annual production capacity of 15 gigawatt hours by 2028. The project will supply batteries for Lucid and other EV manufacturers. Saudi Arabia's National Industrial Development Center (NIDC) proposes creating a production capacity of 28 gigawatt-hours. This includes renewable energy storage in addition to EV batteries.
In February 2022, Australia's EV Metals Group awarded a front-end engineering design (FEED) contract to build two lithium hydroxide monohydrate (LHM) production lines. LHM is needed for EV battery cells and other applications. The US$800 million plant is planned to be built in Yanbu on Saudi Arabia's west coast. Production capacity is expected to be 50,000 tons per year. The raw materials will initially come from Australia.
EV charging infrastructure under construction
Currently, there are only a few EV charging stations in the capital Riyadh, in Jeddah and along the Arabian Gulf. Now, the local company Electromin plans to install a total of 100 charging stations in two project phases. Electromin is a subsidiary of lubricant and automotive services company Petromin. According to the company, the charging stations installed in the 1st phase will be compatible with all homologated vehicles approved by SASO with type 2 AC plugs. In a 2nd phase, additional AC charging stations will be installed, as well as DC charging stations with up to 360 kilowatts. In April 2022, France's TotalEnergies and local company Altaaqaa (part of the Zahid Group) signed a preliminary agreement to develop an EV charging infrastructure.
Fuel-cell vehicles as an additional option
Along with the expansion of hydrogen production, the production of fuel cell vehicles is also being discussed in Saudi Arabia. In April 2021, Hyzon Motors (USA) and the local Modern Group signed a memorandum of understanding to examine a project for the establishment of a truck assembly plant with a potential annual capacity of up to 10,000 vehicles. The target location is the new Neom development zone in the northwest of the country.
ARAMCO examines the production of hydrogen-powered vehicles
National oil company Aramco has commissioned its innovation center LAB7 to study the potential of fuel cell technology in Saudi Arabia. In December 2021, Aramco and the French technology company Gaussin agreed to evaluate the possibilities of producing hydrogen-powered vehicles in Saudi Arabia.
This article is a translation by the German-Saudi Arabian Liaison Office for Economic Affairs (GESALO). The unabridged original version is in German, published by Germany Trade & Invest, the economic development agency of the Federal Republic of Germany.
Co-Author: ROBERT ESPEY, Director at Germany Trade & Invest Dubai Germany Trade and Invest (GTAI).
Source of article: GTAI, link: https://www.gtai.de/de/trade/saudi-arabien/branchen/saudi-arabien-arbeitet-an-e-und-h2-mobilitaet-847512