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Saudi EV investments to top $10 billion
New $5.6 billion investment deal signed with Chinese EV manufacturer
Saudi Arabia's investments in the electric vehicle (EV) sector now look sure to top $10 billion, as a new deal is signed with a Chinese manufacturer and the Kingdom continues to build a new sector that will manufacture and export hundreds of thousands of EVs.
This week the Ministry of Investment signed a $5.6 billion deal with Shanghai-headquartered electric car maker Human Horizons to collaborate on developing, manufacturing and selling the company's EVs. The company currently manufactures electric vehicles under the HiPhi brand in China and is planning to launch sales of its luxury models in some European markets this year. Although establishing a manufacturing plant in Saudi Arabia wasn't specifically mentioned, it seems unlikely that this would not have been built into the deal or perhaps be the key objective.
Saudi Arabia began talking about its strategy to create a new electric vehicle manufacturing sector last year, as it agreed plans with California luxury EV company Lucid Motors, committing to $3.4 billion in investment and financing for Lucid's new production plant in King Abdullah Economic City (KAEC), plus an agreement to buy 100,000 of the company's luxury electric saloon cars over a ten year period. A couple of weeks ago Lucid announced plans to raise $3 billion through a stock offering, 66 percent of which is expected to come from Saudi's Public Investment Fund (PIF).
Lucid expects its plant to produce more than 150,000 EVs per year, meanwhile Ceer has set a production target of 170,000 cars per year. So, during the next five years, the Kingdom could have a annual production of over 300,000 per year. This only makes sense, if Saudi Arabia becomes a major exporter of electric vehicles and this is exactly what the government's goal is.
By way of comparison, Germany is currently the third largest producer of electric vehicles in the world, after China and the USA. In 2021, Germany produced about 328,000 battery electric vehicles (BEVs) worth 13.7 billion euros. In 2022, the country saw this number jump to reach 470,592 units. So, with a near-term target of producing more than 300,000 EVs per year, Saudi Arabia could soon rocket from zero production up to being ranked among the top ten EV producers worldwide.
There is obviously a clear economic benefit to Saudi Arabia's national EV sector strategy, with billions of dollars of estimated contribution to the country's gross domestic product (GDP). However, there is also the impact that introducing a new, large scale Fourth Industrial Revolution sector to the Kingdom will have on jobs, skills and the manufacturing ecosystem.
The creation of a new EV sector, led by Ceer and Lucid will bring some of the world's most advanced manufacturing processes, leveraging AI, robotics, IoT, digital twins and other new technologies. This will both create opportunities for other high-tech players in the ecosystem and a stream of highly skilled jobs for Saudi nationals. Lucid forecasts that its plant would create more than 4,500 jobs, while Ceer could create up to 30,000 direct and indirect jobs. Both companies will have high-tech training programmes and facilities, forming partnerships with universities, colleges and other institutions.
The prospect of adding another EV manufacturer, such as Human Horizons to the local production sector could push all of these estimates up significantly. The Saudi minister for investment His Excellency Khalid Al Falih told media at Davos last year that there were likely to be three new electric vehicle manufacturing plants established in the country. Now Human Horizons is definitely the front runner to set up a third plant, which could potentially see annual national production targets approach 500,000 EVs per annum.
Find out more about Saudi Arabia’s EV story: