Saudi Arabia making headway with Vision 2030’s clean energy plans
Reports surfaced last week about plans by the California-based Lucid Motors to set up a manufacturing plant in Saudi Arabia as part of its expansion in the region.
The plant, which may become Lucid Motors’ Middle Eastern center, will be in line with the Saudi government’s plans to produce electric vehicles (EVs) as it diversifies its economy away from oil.
The $360 billion Public Investment Fund (PIF), already a key shareholder in Lucid Motors, is expected to co-fund the plant. There is no confirmation on the plant’s site as of yet, but it is most likely to be either at King Abdullah Economic City or in the futuristic city of NEOM located in the country’s northwest.
Saudi Arabia has already put itself on the path to adopting EVs. It is worth noting that the country’s transport sector consumes almost a quarter of its total energy. The Saudi Standards, Metrology and Quality Organization has already approved imported EVs and allowed local agents to start importing these vehicles.
Other initiatives taken by the government may contribute to the promotion of EVs, such as the Saudi Electricity Company’s agreement with Nissan for the first EV pilot project in the country. The agreement includes the development of fast-charger EV stations.
Although Saudi Arabia has started to take some steps toward EVs, it remains to be seen how the challenges inherent to their deployment will be mitigated. One of the main challenges is low fuel price. Although fuel prices have been increasing recently, Saudi Arabia still subsidizes fuel prices, which generally remain low.
Given low fuel prices it would be necessary to implement incentives for the deployment of EVs in Saudi Arabia for them to achieve a certain level of competitiveness against fuel-powered conventional vehicles.
In my opinion, hosting and co-funding a Lucid Motors plant in Saudi Arabia will further endorse the Saudi government’s vision for clean energy in general and PIF guidelines for long-term sustainable investments in particular.
• Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.