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.