Powering Vision 2030: China's Strategic Support for Saudi Arabia's EV Sector

Saudi Arabia is the second-largest producer and exporter of crude oil and holds the second-largest proven oil reserves in the world, with around 267 billion barrels. The country's oil sector is a significant part of its economy, accounting for 75% of government revenue and approximately 90% of exports. However, due to the volatility of oil prices and the potential for economic instability, Saudi Arabia is increasingly focusing on non-oil activities to reduce its dependency on the oil sector. Non-oil commodities tend to have more stable prices, providing protection against these fluctuations and strengthening the country's social, economic, and financial sectors.

As part of its Vision 2030 program, Saudi Arabia aims to diversify its economy, reduce its reliance on oil and gas, and promote green mobility, including the adoption of electric vehicles (EVs) and hybrid electric vehicles (HEVs). Saudi Arabia's Public Investment Fund (PIF), with assets totaling US$ 700 billion, has set an ambitious goal to produce 500,000 electric vehicles (EVs) annually by 2030, increasing from its earlier target of 150,000 EVs by 2026. Currently, Ceer and Lucid are the primary EV manufacturers in Saudi Arabia.

China is also playing a crucial role in shaping the future of Saudi Arabia's EV sector. Chinese involvement has been growing rapidly through strategic investments, partnerships, and technological advancements. Additionally, Chinese EV brands are expanding their presence in Saudi Arabia by aggressively marketing their products and establishing showrooms and service centers. These brands offer competitively priced EV models to attract price-sensitive customers and compete with established international brands.
 

Charge Up: Exploring the Key Market Drivers Behind Saudi Arabia's Electric Vehicle Boom

According to recent findings by IMARC Group, the electric vehicle market in Saudi Arabia is projected to grow at a compound annual growth rate (CAGR) of 36.6% from 2024 to 2032. This rapid increase in demand is driven by government initiatives and growing consumer adoption. Several factors contributing to the market's expansion are outlined below:

Government Initiatives: The Saudi Arabian government is actively supporting the growth of electric vehicles as part of its strategy to diversify the economy away from oil dependence. To achieve this, the government is engaging in joint ventures, collaborations, and partnerships with leading players, and making substantial investments in EV manufacturing. For example, in 2022, Ceer—a joint venture between the Taiwanese technology group Foxconn and Saudi Arabia’s Public Investment Fund—secured a US$ 96 million deal with the King Abdullah Economic City to establish an EV manufacturing facility in Saudi Arabia. Additionally, in May 2022, Saudi Arabia unveiled plans to develop a US$ 2 billion plant for EV battery metals. This facility will produce essential materials for electric vehicle batteries, further supporting the growth of the Kingdom's EV industry.
 

Leading Player Support: Several international players like Lucid and BYD are expanding their presence in Saudi Arabia and sharing expertise in battery technology, autonomous driving, and other EV innovations with Saudi partners which accelerates the development of the local EV industry. For instance, in September 2023, Lucid Motors launched its first international manufacturing facility in Saudi Arabia, with plans to produce up to 155,000 electric vehicles annually. Similarly, in January 2023, the American startup Canoo partnered with Saudi Arabia’s General Contracting Co. Olayan to sell, service, and distribute its vehicles. The collaboration also includes a joint venture to develop a digital vehicle ecosystem, covering service maintenance, local assembly, and future manufacturing.
 

Rising Infrastructure Development: The Saudi government is prioritizing the development of electric vehicle infrastructure in the country. They are expanding EV charging networks, including fast-charging stations, and developing smart grid technology to manage increased electricity demand. The government is heavily investing in this infrastructure, aiming to install thousands of charging stations nationwide. Moreover, the Electric Vehicle Infrastructure Company (EVIQ), a joint venture between the Public Investment Fund (PIF) and the Saudi Electricity Company (SEC), plans to establish over 5,000 chargers at more than 1,000 stations by 2030.
 

Economic Diversification and Investments to Support Domestic Production: The PIF's investments in global EV companies, such as Lucid Motors, Hyundai, and Ceer, along with the rise of Chinese FDI into Saudi Arabia, are boosting the country's plans to develop a domestic EV manufacturing industry. For instance, in October 2023, PIF and Hyundai Motor Company signed a joint venture agreement to establish a new automotive manufacturing plant in Saudi Arabia. The total investment for the plant is estimated to exceed US$ 500 million, and it will produce both internal combustion engine vehicles and electric vehicles.
 

China's Strategic Moves in the Saudi EV Market: Latest Trends and Developments

• In May 2024, BYD Co., Ltd. inaugurated its first showroom in Saudi Arabia, introducing NEV models for test drives. Located in Riyadh’s Al Ghader district, the new outlet was established by local distributor Al-Futtaim Electric Mobility Company. The facility includes a showroom, discovery center, and service hub.
• In September 2023, Geely Holding Group’s electric mobility technology brand, ZEEKR, signed agreements with partners in the United Arab Emirates, Saudi Arabia, Qatar, and Bahrain to expand EV sales in these markets. ZEEKR has established four partnerships: with AW Rostamani Holdings in the United Arab Emirates, Wallan Trading Company in Saudi Arabia, Blue Lake Motors in Qatar, and Y.K. Almoayyed & Sons in Bahrain.
• In June 2023, Saudi Arabia's Ministry of Investment signed a US$ 5.6 billion deal with Chinese electric car maker, Human Horizons, for vehicle development, manufacturing, and sales. This agreement is part of over US$ 10 billion in investments announced at an Arab-China business conference in Riyadh, covering sectors like technology, renewable energy, agriculture, real estate, metals, tourism, and healthcare.
• In December 2022, Enovate Motors, a Chinese EV startup backed by Shanghai Electric Group, partnered with Saudi firm Sumou to build a US$ 500 million factory in Saudi Arabia. The plant will have an annual capacity of 100,000 cars and will include a research and development center.
   

Unleashing the Future: Key Drivers Fueling Growth in Saudi Arabia's Electric Vehicle Market

Ongoing research and development in battery technology and autonomous driving in Saudi Arabia for electric vehicle manufacturing is expected to boost the market during the forecast period. In 2024, Lucid and in 2023, Ceer partnered with Saudi Arabia’s King Abdulaziz City for Science and Technology (KACST) to advance EV technology in the Kingdom. These partnerships will focus on joint research in battery technologies, aerodynamics, autonomous driving, and artificial intelligence.

Increasing awareness of electric vehicles among the Saudi population, along with their lower running costs and environmental benefits, has shifted consumer interest toward EVs over the past two years. The country imported 779 EVs in 2023, up from 210 the previous year. This number is expected to rise as the import and domestic production of electric vehicles continues to increase rapidly, further boosting the EV market in the coming years.

Impactful Insights: Stay Ahead of the Curve with IMARC's Unmatched Expertise

Companies need to set goals for the development of new and innovative electric vehicles. It is necessary for them to analyze their existing products and identify areas where new technological advancements can be introduced in the manufacturing of electric vehicles for a better user experience. The analysis of competitors’ business strategies and innovation of products is again a very important parameter for developing unique and featured EVs.

At IMARC Group, we specialize in assisting companies through market research to identify the latest trends, business strategies, and product opportunities. We assist organizations in the electric vehicles market in finding their target audience, their preferences, and purchasing behavior, and creating powerful marketing plans. We can assist by providing information on new product launches, innovations, and recent trends and developments. We help businesses position themselves for long-term success and growth.