As Saudi Arabia spearheads the transition towards sustainable solutions, electric vehicles are surging ahead and are expected to revolutionise transportation in the Middle East.
When Saudi Crown Prince Mohammed bin Salman launched the kingdom’s first automotive brand, Ceer, in 2022 to produce, design, manufacture, and sell EVs, his message and ambitions were clear.
Saudi Arabia wasn’t merely establishing an automotive brand. The Crown Prince emphasised that the kingdom was “igniting a new industry and ecosystem.”
This initiative aimed to attract international and local investments, create job opportunities for local talent, empower the private sector, and increase Saudi Arabia’s gross domestic product over the next decade. It was part of the Public Investment Fund’s strategy to drive economic growth in alignment with Vision 2030.
Following the announcement, the industry ignited, with additional EV brands exploring production facilities and striking new deals in Saudi Arabia. Among them were US-based Lucid, Aston Martin, and various startups.
According to a report by the investment management firm Goldman Sachs, EVs could constitute nearly half, or 50 per cent, of global car sales by 2035. This projection holds true despite the challenges faced by the sector, including competing market dynamics.
Additionally, analysts predict that within five years following that date, a similar proportion of car sales will consist of more advanced autonomous or partially autonomous vehicles.
Regarding Saudi Arabia’s overall objectives, it’s prudent to take a step back, as the kingdom has made clear plans for its ambitions toward electrification.
“One of the key aspects in terms of helping achieve that vision and ambition is the availability of a robust public charging infrastructure network,” Mohammad Gazzaz, chief executive of the Electric Vehicle Infrastructure Company, told Arab News.
Research conducted by his firm, a joint venture between PIF and the Saudi Electricity Company, revealed that while the kingdom’s population is significantly interested in EVs, inadequate infrastructure is a key obstacle for potential buyers.
However, describing it as a “chicken or the egg situation,” investors are hesitant to allocate funds to infrastructure due to the high capital costs and the limited number of EVs currently on the road.
Saudi Arabia has set a goal to transition 30pc of all vehicles in Riyadh to electric by 2030. This target is part of a larger strategy to reduce emissions in the capital city by 50pc, aligning with the country’s objective of achieving carbon neutrality by 2060.
Commenting on the EV market’s growth in the region, Alexander Lemzakov, CEO and co-founder of Wize, a UAE-based eco-friendly mobility startup, noted that the sector in Saudi Arabia and the Middle East is experiencing rapid growth.
He added that this growth is driven by factors such as government support, environmental concerns and economic diversification as well as technological advancements and urbanisation trends.
“Initiatives like Vision 2030 in Saudi Arabia aim to diversify the economy and reduce reliance on oil, which aligns with broader sustainability agendas. Moreover, innovations such as battery-as-a-service and battery swapping make EVs more accessible and convenient for people,” Lemzakov said.
He added: “Given these factors, the EV sector is well-positioned for significant growth in the future, contributing to a more sustainable world.”
In February last year, Goldman Sachs forecast that EV sales would soar to 73 million units by 2040, marking a substantial increase from around 2m in 2020. Concurrently, the proportion of EVs in global car sales is expected to skyrocket from 2pc to 61pc during this period.
Furthermore, in numerous developed nations, the share of EV sales is anticipated to surpass 80pc, underscoring the product’s widespread adoption and dominance in the automotive market.
In January of this year, research firm Mordor Intelligence predicted that the Middle East and Africa automotive EV market size will be estimated at $3.33 billion in 2024 and will reach $9.42bn by 2029. This sector is projected to grow at a compound annual growth rate of 23.2pc during the forecast period from 2024 to 2029.
Wize has focused its efforts on enhancing its entry into the Saudi market by forging strategic partnerships with third-party logistics providers and companies specialising in last-mile delivery.
“The EV market is predicted to experience significant growth over the next three years, driven by technological advancements, increased environmental awareness, and investments in charging infrastructure,” Lemzakov said.
He added: “Battery-as-a-service models will accelerate this growth by making EV ownership more accessible and affordable. This will also address concerns surrounding battery life and replacement costs.”
Moreover, he emphasised the rapid growth of the last-mile delivery sector, particularly in the Middle East and North Africa.
“By transitioning even a single company to electric motorcycles, a significant impact can be made on the overall percentage of electric vehicles in the region,” Lemzakov said.
Faisal Sultan, vice president and managing director of Lucid Middle East, said that while the industry is still in its early stages of development, significant expansion is anticipated in the future, driven by a growing appetite among customers in the region for the best eco-conscious automobiles.
“We are already on a path for electric vehicles to become a part of our daily lives, and Lucid is eliminating the most common barriers of ownership, including price, performance, and driving range,” Sultan said.
He added: “Charging infrastructure also plays a key role in expanding adoption, which is why we recently announced a charging allowance of SR3,750 for new customers to put toward the installation of a home charging accessory,”
In 2024, research firm Canalys predicts that the global EV market will grow by 27.1pc, reaching 17.5m units.
As forecasts indicate exponential growth of the EV market, eco-conscious modes of transportation are no longer merely ambitions. The sector is rapidly evolving into a cornerstone of our lives, driving the nation toward a tomorrow that prioritises sustainability and environmental responsibility.
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