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Press Dossier    By Date   15/04/2024 Saudi Arabia leads EV surge, driving sustainable mobility revolution in Mideast

Arab News, Mon, Apr 15, 2024 | Shawwal 5, 1445

​​Saudi Arabia leads EV surge, driving sustainable mobility revolution in Mideast

Saudi Arabia: As Saudi Arabia spearheads the transition toward sustainable solutions, electric vehicles are surging ahead and are expected to revolutionize transportation in the Middle East. But the question remains: will they soon become a part of our daily lives?

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 emphasized 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 percent, 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, CEO of the Electric Vehicle Infrastructure Co., told Arab News. 

Research conducted by his firm, a joint venture between PIF and the Saudi Electricity Co., 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 30 percent 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 50 percent, 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 urbanization 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 told Arab News. 

He added: “Given these factors, the EV sector is well-positioned for significant growth in the future, contributing to a more sustainable world.” 

Lemzakov also outlined the reasons behind the growing popularity of EVs, highlighting factors such as government support for eco-friendly transportation, longer vehicle lifespans, cost-effective maintenance, and reliability, particularly in the business-to-business segment. 

In February last year, Goldman Sachs forecasted that EV sales would soar to 73 million units by 2040, marking a substantial increase from around 2 million in 2020. Concurrently, the proportion of EVs in global car sales is expected to skyrocket from 2 percent to 61 percent during this period. 

Furthermore, in numerous developed nations, the share of EV sales is anticipated to surpass 80 percent, 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 $9.42 billion by 2029. This sector is projected to grow at a compound annual growth rate of 23.2 percent during the forecast period from 2024 to 2029. 

Governments in the region are increasingly emphasizing the promotion of eco-friendly vehicles and raising awareness about energy storage solutions within the renewable sector. These efforts are anticipated to stimulate growth in the market for EVs and related technologies in the foreseeable future. 

“Moreover, expanding the 5th generation-based telecommunication network and implementation of Vision documents in Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait are likely to further aid the Middle East and African EV market in the coming years,” the report stated. 

Wize has focused its efforts on enhancing its entry into the Saudi market by forging strategic partnerships with third-party logistics providers and companies specializing in last-mile delivery. 

However, revisiting the primary inquiry, do we envision EVs integrating seamlessly into our everyday routines moving forward?  

“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 replied to Arab News. 

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 emphasized 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. 

He continued: “This shift is especially relevant because the last-mile delivery market in the MENA (Middle East and North Africa) region is expected to grow substantially due to the surge in e-commerce. It showcases the significant environmental and economic benefits of adopting electric vehicles in this fast-evolving sector.” 

Faisal Sultan, vice president and managing director of Lucid Middle East, told Arab News 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,” 

EVs are appealing for their futuristic design, but one concern that potential buyers may consider is the need for more infrastructure to support these vehicles. 

Gazzaz noted that Saudi Arabia has a “very young population, very tech-savvy, and essentially, there is a huge interest in electric vehicles as they look a little bit more futuristic.” 

He continued: “I think one of the key things that was highlighted as a concern or a barrier for potential buyers of electric vehicles was the lack of the infrastructure, so this is what we are trying to address head-on.” 

In 2024, research firm Canalys predicts that the global EV market will grow by 27.1 percent, reaching 17.5 million 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 prioritizes sustainability and environmental responsibility.

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