Despite having rich oil reserves, Saudi Arabia plans to generate 9.5 gigawatts of electricity from renewable energy by 2030. Besides leveraging its renewable energy potential, the nation has set a goal to become a global leader in electric vehicle sector. To pursuit this goal, Saudi Arabia has been making significant strides towards becoming a global leader in electric vehicles (EVs).
Here are some reasons why it has the potential to achieve this-
- Availability of Critical Minerals: Saudi Arabia has proximity to regions rich in critical minerals required for EV batteries, such as lithium, cobalt, manganese, nickel, and graphite. To name a few regions closer to Saudi are Chile, that holds half of the world’s lithium reserves, while the Democratic Republic of Congo (DRC) possesses half of all cobalt reserves. Thus, it can leverage its proximity to these mineral sources, Saudi Arabia can secure a reliable supply chain for EV production.
- Boosting Investment in EV Infrastructure: To accelerate the promotion of EV in the country, it has made substantial investments in EV infrastructure. For instance, in November 2022, Saudi Arabia launched Ceer, its first domestic EV manufacturer. Additionally, the kingdom announced a $6 billion investment in a steel plate mill complex and an EV battery plant. Furthermore, the US-based EV company Lucid Group plans to establish its first overseas plant in Saudi Arabia in the coming decade.
- Economic Diversification: As a part of its Vision 2030, the nation is recognizes the need to diversify its economy beyond oil. By embracing EV manufacturing, it aims to eliminate the impact of declining oil demand. The goal is to produce 500,000 EVs annually by 2030, equivalent to the current annual car demand in the country.
- Industry Collaborations: Saudi Arabia has forged partnerships with international players. For instance, it signed a $5.6 billion deal with Chinese firm Human Horizons for collaboration in EV development, manufacturing, and sales. Additionally, discussions with Tesla about setting up a manufacturing facility in the kingdom indicate its commitment to becoming an EV force.
- Geopolitical Influence: Saudi Arabia’s geopolitical influence allows it to ink partnerships and attract foreign investments. With its ambition to emerge as a leader in EVs, it can collaborate with global players and tap into their expertise and resources.
However, there exists fierce competition in the global market with the presence of global leaders in EV production. Saudi will need to balance its ambitions with the challenges posed by established players will be crucial for its success in the EV industry.