How Saudi Arabia’s investments are driving electric vehicle adoption in the Middle East 

Special How Saudi Arabia’s investments are driving electric vehicle adoption in the Middle East 
US-based electric vehicle maker Lucid Group, majority owned by Saudi Arabia’s Public Investment Fund, will set up its first overseas factory in the Kingdom as regional demand for EVs accelerates. (AFP)
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Updated 14 March 2023

How Saudi Arabia’s investments are driving electric vehicle adoption in the Middle East 

How Saudi Arabia’s investments are driving electric vehicle adoption in the Middle East 
  • Saudi investments in EV production are expected to reach $50 billion over the next decade
  • At least 30 percent of the vehicles on the road in Riyadh are expected to be electric by 2030

DUBAI: Although the electric-vehicle market in the Middle East is still in its infancy, the global rollout of new EV models is accelerating their adoption in the region as governments and consumers embrace the transition away from the internal combustion engine.

A new study by Goldman Sachs predicts that EVs will make up about half of new car sales worldwide by 2035. “While the EV sector is beset by some major crosscurrents . . . our strategists expect technology innovation to supersede these forces in the coming years,” says the report by Goldman Sachs Research.

Meanwhile, as increased competition, government incentives and falling prices of battery-related products and vehicle components make EVs more affordable, the likelihood grows of at least some models becoming as cheap as vehicles with IC engines before the year ends.




STC Group Announces Partnership with #Lucid LLC for Connectivity Services for Lucid Vehicles in KSA. (Supplied)

While Elon Musk’s Tesla brand currently leads the Middle East EV market, among the electric models that can be found in the region are the MG ZS EV, Renault Zoe E-Tech and the Volvo XC40 Recharge Pure Electric, alongside the recently launched Swedish brand, Polestar.

The increasing focus on EV adoption, including in the Arab Gulf states, is largely driven by national commitments to accelerate the transition from fossil fuels to renewable energy sources to achieve net-zero targets within the coming decades.

This transition will not happen overnight, however, as the Gulf countries still need to increase greatly the number of charging stations available for these new vehicles — to give EVs sufficient range and to incentivise consumers to buy electric.

“The market for electric vehicles is expected to grow across the region, driven largely by the continued government-led reforms, specifically in building infrastructure to allow consumers to travel long distances,” Tom Lee, managing director of MG Motor Middle East, told Arab News.

According to market research firm Mordor Intelligence, the Middle East and African EV market was valued at $40.25 million in 2021, and is expected to reach $93.10 million by 2027, registering a compound annual growth rate of more than 15 percent during the forecast period.

The numbers are remarkable considering that the global EV market suffered a major setback during the COVID-19 pandemic, which saw the closure of several manufacturing units and the start of a global semiconductor chip shortage, which continues to impact industries to this day.

Sales of zero-emissions vehicles have since bounced back worldwide, doubling in 2021 from the previous year, marking a new record at just under 7 million cars — equivalent to 10 percent of all car sales, according to the Global EV Outlook, published by the Electric Vehicles Initiative.

The same was the case in 2022, when global sales of EVs steadily increased, with 2 million cars sold in just the first quarter. This year, EV market revenues are projected to reach $322.50 million.

“Education of consumers (in the region) has rapidly increased, driven by GCC countries’ renewable energy plans and the drop in the price of electric vehicles,” Lee told Arab News.

This awareness is likely to grow when the UAE hosts the UN Climate Change Conference, COP28, in November, coinciding with its “Year of Sustainability.” Lee says the UAE’s manufacturing plans are also a lucrative investment opportunity.

Currently, eco-friendly or hybrid vehicles make up some 50 percent of the Dubai Roads and Transport Authority’s taxi fleet. A five-year plan has been launched to have only hybrid, electric or hydrogen-powered taxis on the emirate’s roads by 2027.

Launched in 2016, Ekar, the region’s first mobility company and self-drive super app, has jumped on the EV bandwagon, adding 10 Teslas to its fleet available for rent in Dubai and five additional Teslas available in Abu Dhabi’s Masdar City.

“EVs are exceptionally good cars for car sharing,” Vilhelm Hedberg, co-founder and CEO of Ekar, told Arab News.

“There are fewer moving parts in an EV compared to an internal combustion engine car, which has a ton of different opportunities for failure, maintenance and issues to arise, making the vehicle off-road time much lower in EVs.”




Vilhelm Hedberg, founder of Ekar, believes the region is ‘heading in the right direction’ with EV. (Supplied)

At present, there are about 325 charging stations for EVs across the UAE, catering for less than 1 percent of all vehicles registered in the country. However, Hedberg believes the number of EVs on the road will rise over the next couple of years.

“There’s a global readiness equation that’s calculated for EVs and the UAE finds itself ranked eighth in the world,” he said. Norway, China, Germany, Singapore and the UK take the top five rankings for EV market share.

“(Because of) the very fact that the UAE has the infrastructure already beginning to be laid out, it is headed in the right direction.”

With total Saudi investments in EV production expected to reach $50 billion over the next decade, the hope is that least 30 percent of the vehicles on the road in Riyadh will be electric in the next seven years.

“The Saudi public has a strong affinity for their cars. There’s so much enthusiasm for classic cars and for iconic car models,” a spokesperson for Ceer, Saudi Arabia’s first homegrown EV brand, told Arab News.




Ceer, Saudi Arabia’s first homegrown electric vehicle brand, has a production target of 170,000 cars a year. (Supplied)

According to the spokesperson, Saudis “also have a strong affinity for technology” and, therefore, will look to adopt new concepts.

“You can find battery electric vehicles on the streets of Dammam, Jeddah and Riyadh even though many brands don’t sell BEVs officially in Saudi Arabia today,” the spokesperson said, referring to fully electric vehicles with rechargeable batteries and no petrol engine.

Claiming that Ceer’s research on consumer insights revealed a strong interest in the company’s portfolio of vehicles, the spokesperson said: “The interest is both due to the vehicles’ iconic design and infotainment features, but also due to a host of other factors, including value for money, total cost of ownership, and increasing awareness of topics related to sustainability.”

In 2020, there were more than 15 million registered vehicles in the Kingdom. Four-fifths of these were cars or light vehicles. According to the Saudi Energy Efficiency Center, the transport sector consumed about 21 percent of the Kingdom’s total energy that year.


Saudi Arabia plugs into the future




Saudi women test-drive an electric a car manufactured by Lucid Group at the KSA Green Transition Journey exhibition in the Red Sea port of Jeddah. (AFP)

  • With 61 percent of shares, Saudi Arabia is the majority owner of Lucid Group through its Public Investment Fund, or PIF. Set to be built in King Abdullah Economic City on the Red Sea coast, Lucid’s first overseas manufacturing plant will initially reassemble Lucid Air vehicle “kits” manufactured in Arizona, the US.
  • Eventually, the plant will build complete vehicles with a planned peak capacity of 150,000 vehicles a year. Saudi Arabia’s first homegrown EV brand, Ceer Motors, was launched late last year by Crown Prince Mohammed bin Salman.
  • Also backed by PIF, Ceer will be among the first automotive brands to produce EVs in Saudi Arabia, with plans to sell a range of vehicles for consumers both in the country and the Middle East and North Africa region. The first units are expected to become available in 2025.
  • With a production target of 170,000 cars a year, Ceer is expected to create up to 30,000 direct and indirect jobs in the region, and directly contribute $8 billion to Saudi Arabia’s GDP by 2034.
  • The Kingdom’s giga-projects, such as Qiddiya, Roshn and NEOM, have plans to deploy fleets of EVs, produced in time by the Lucid and Ceer factories in King Abdullah Economic City.




Throughout the event, Schneider Electric is highlighting its portfolio of EVlink chargers, including its latest EVlink Smart Wallbox charging stations. (Supplied)

To support the transition from traditional petrol engines to electric mobility, Mohamed Shaheen, KSA and Yemen cluster president at Schneider Electric, believes a strong energy management infrastructure is essential.

The EVlink smart charger launched in the region last year is just one of many next-generation products that will help build a more sustainable energy matrix for the future, he told Arab News.

According to Shaheen, although the cost of an eco-friendly vehicle is markedly lower today than before, simply increasing the number of EVs on the road will not be enough to reduce emissions.

“A smart and sustainable charging experience that can monitor, manage and eventually limit the use of EV charging devices with the aim of optimizing energy consumption can help EVs become even cleaner,” he said.

According to Boston-based Energy Sage, charging an EV is about 3.5 times cheaper per mile than the cost of fueling up a petrol car.

“It is imperative to understand that — in the long term — EV charging is cost-effective,” particularly when steps are taken to develop more sustainable production processes, Shaheen said.

However, despite the growing public readiness for EV adoption in the region, the deciding factor ultimately would be consumers’ willingness to swap their petrol engine vehicle for an electric option.

Surveys show that people are looking for “the reliability and comfort they are used to in traditional engines,” said Lee of MG Motors.

“With the falling prices of EVs and the increase in petrol prices, there has been a fundamental shift in the market.”




Launch event of Ceer, the first Saudi electric vehicle brand, in November 2022. (Supplied)

Pointing to the fluctuations in fuel prices over 2022 as a factor that has influenced consumer decision-making, he said that by 2026 almost 45,000 EVs are expected to be sold in the region.

Fuel bills apart, EVs generally have a strong resale value, which is why more and more people are looking at them as a sound investment, according to Ekar’s Hedberg.

He drew attention to a survey commissioned by Audi Abu Dhabi, which found a change of sentiment among consumers, with 52 percent of UAE residents considering buying an EV.

“But my view of the world is that people shouldn’t own cars,” Hedberg said. “They should treat cars like they treat clothing and interchange them for the various occasions that they need them for,” he said.

Studies show that every car shared removes 17 private cars from the road, he said.

In recent years, the car-sharing trend has caught on in European cities, resonating with people who want to lead a more sustainable lifestyle.

While the same cannot be said for the Middle East region yet, the consensus view of automotive-industry executives is that EVs and new energy vehicles are the way forward.

 

 


China to implement zero tariffs on coal imports to the end 2023

China to implement zero tariffs on coal imports to the end 2023
Updated 24 March 2023

China to implement zero tariffs on coal imports to the end 2023

China to implement zero tariffs on coal imports to the end 2023

BEIJING: China will extend some preferential tax policies and continue to implement zero tariffs on coal imports until the end of this year, state media CCTV reported on Friday, citing a cabinet meeting chaired by Premier Li Qiang on the same day, according to Reuters.

China cut tariffs on coal to zero in April last year in the face of concerns over domestic energy security and supply disruptions.

The country’s coal imports in the first two months of this year surged 71 percent from the same period last year, as utilities stepped up purchases of cheap thermal coal from Indonesia while arrivals from Mongolia also picked up after the easing of COVID-19 restrictions.

China will also cut some taxes for small companies and individual businesses and extend such favorable policy until the end of 2024, state media reported.

Other preferential tax policies include a reduction in tax related to research and development and a halving of logistics companies’ tax on warehouse land for bulk commodity storage in urban areas.

The cuts are expected to reduce the total burden by more than 480 billion yuan ($69.80 billion) a year, CCTV said.

Last year, when private businesses were hit hard by stringent COVID-19 lockdowns and curbs, China’s tax and fee cuts, tax refunds and deferred payments totalled 4.2 trillion yuan, the finance ministry said. That included 2.4 trillion yuan in VAT tax rebates, the largest in recent years.

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World shares fall on banking turmoil, recession worries

World shares fall on banking turmoil, recession worries
Updated 24 March 2023

World shares fall on banking turmoil, recession worries

World shares fall on banking turmoil, recession worries

BANGKOK: Shares fell Friday in Europe and Asia as worries flared over turmoil in the banking sector and potentially worsening risks of recession, according to the Associated Press.

European benchmarks sank as shares in Deutsche Bank plunged more than 10 percent. Reports said its shares fell because the company was facing higher costs for insuring itself against default. US futures turned lower and oil prices fell more than $2.

Investors are worried that more banks might suffer a debilitating exodus of customers following the second and third-largest US bank failures in history. That turmoil is clouding the outlook for what the Federal Reserve will do with interest rates after hiking them to market-rattling heights over the last year.

The fear is that all the turmoil in the banking industry could cause a sharp pullback in lending to small and midsized businesses around the country. That could put more pressure on the economy, raising the risk for a recession that many economists already saw as likely.

Germany’s DAX lost 2.5 percent to 14,834.24 and the CAC 40 in Paris tumbled 2.5 percent to 6,965.01. Britain’s FTSE 100 declined 2.1 percent to 7,245.65. The future for the S&P 500 was 0.9 percent lower while that for the Dow industrials lost 1.1 percent.

Deutsche Bank’s shares plunged 14 percent after an overnight surge in credit default swaps — a hedge against defaults for bond investors. Other European banks also lost ground. Commerzbank dropped 8.7 percent,

Societe General skidded 7.7 percent and Credit Suisse, itself subject to a government-arranged buyout by UBS, dropped 8.6 percent. UBS gave up 8 percent.

Regional banks’ shares in Asia were modestly lower Friday, with HSBC Holdings plc losing 2.9 percent in Hong Kong while mid-sized Japanese bank Resona Holdings declined 2.6 percent.

Shares in Japanese energy and electronics company Toshiba Corp. gained 4.2 percent after it announced late Thursday that it had accepted a $15 billion tender offer from a buyout fund made up of the nation’s major banks and companies. If regulators approve it, the proposed buyout by private equity firm Japan Industrial Partners would be a major step in troubled Toshiba’s yearslong turnaround effort, allowing it to go private.

Japan reported that its inflation rate fell to 3.3 percent in February from 4.3 percent the month before, though core inflation excluding fresh food and energy costs rose to 3.5 percent from 3.2 percent. The data suggest persisting pressure on the Bank of Japan to adjust its below zero interest rate policy, though economists said they expect price pressures to abate in coming months.

“Given the recent market turmoil surrounding the banking sector,” ING economists said, “the BOJ’s move will likely be well communicated with the market before it substantially changes its policy.”

Tokyo’s Nikkei 225 index lost 0.1 percent to 27,385.25 and the Kospi in Seoul gave up 0.4 percent to 2,414.96. Hong Kong’s Hang Seng slipped 0.7 percent to 19,915.68 and the Shanghai Composite index sank 0.6 percent to 3,265.65.

Australia’s S&P/ASX 200 shed 0.2 percent to 6,955.20. Shares fell in Mumbai but rose in Bangkok and Taiwan.

On Thursday, the S&P 500 added 0.3 percent for its third gain in four days while the Dow Jones Industrial Average gained 0.2 percent. The Nasdaq composite held up better thanks to strength in technology shares, gaining 1 percent.

Stocks fell sharply the day before after the Federal Reserve indicated that while the end may be near for its hikes to interest rates, it still doesn’t expect to cut rates this year. Fed Chair Jerome Powell also insisted the Fed could keep raising rates if inflation stays high.

Stocks in the financial industry ended up being the heaviest weight on the S&P 500 despite rising in the morning. First Republic Bank fell 6 percent after giving up a gain of nearly 10 percent.

In other trading Friday, US benchmark crude oil dropped $3.09 to $66.87 per barrel in electronic trading on the New York Mercantile Exchange. It gave up 94 cents to $69.96 per barrel.

Brent crude, the pricing basis for international oil, lost $3.08 to $72.42 per barrel.

The US dollar fell to 130.09 yen from 130.83 yen. The euro slipped to $1.0743 from $1.0833.


Apico secures $29m funding for new plastics factory in Riyadh

Apico secures $29m funding for new plastics factory in Riyadh
Updated 24 March 2023

Apico secures $29m funding for new plastics factory in Riyadh

Apico secures $29m funding for new plastics factory in Riyadh

RIYADH: A new plastics factory in Riyadh is a step closer after the Arabian Plastic Industrial Co. secured SR105.5 million ($29 million) of funding from the Saudi Investment Bank.

According to a filing to the Kingdom’s stock market, Apico will use the funds – which come in the form of working capital and a medium term loan – to build the facility as part of a plan to expand production.

The Jeddah-based company had signed a land lease contract with the Saudi Authority for Industrial Cities and Technology Zones – known as Modon – in 2022 with regards to the factory.

Of the SR105.5 million, SR55.5 million will be spent on the expansion with the remainder earmarked for existing facilities.

Apico made its debut on the Kingdom’s stock market in October 2022, when its shares climbed 18.52 percent above its listing price on the first day of trading.

The company offered 1 million shares, or 20 percent, of its SR50 million market capitalization.

The offering coverage was 15.43 times oversubscribed, with the offer price set at SR27 per share.

Established in 1996, Apico serves customers across different sectors, including to Almarai Co., flynas, TotalEnergies, and Nahdi Medical Co..


Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco
Updated 24 March 2023

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

Moody’s boosts ratings for six key Saudi companies, including PIF and Aramco

RIYADH: Saudi Arabia’s Public Investment Fund and energy giant Aramco are among six firms in the Kingdom to have their ratings boosted from stable to positive by Moody's Investors Service.

The credit rating agency said the upgrade in outlook is linked to the strength of Saudi Arabia’s economy, which was also changed to positive from stable earlier this month.

Saudi Basic Industries Corporation, also known as SABIC, Saudi Telecom Co., known as stc, and the Saudi Power Procurement Co. were among the other companies to see their grading increase.

The Saudi Electricity Co. also received a boost.

In a report explaining its rationale for the shift, the ratings agency said: “(These) rating actions are a direct consequence of the sovereign rating action and reflect the credit linkages between the Government of Saudi Arabia and each of the six entities. 

“While these corporates benefit to varying degrees from international assets and cash flows, they all have significant credit linkages to the Saudi Arabia sovereign and are exposed to the domestic environment including political, economic, regulatory and social factors.”

Reflecting on Aramco, the report said the company’s A1 rating “reflects its very large operational scale, significant downstream integration and strong financial flexibility given its low cost structure and low leverage relative to cash flows.”

It added: “These characteristics provide resilience through oil price cycles and also help mitigate carbon transition risk, which is a material credit consideration for oil and gas companies.”

Moody’s said that SABIC had been able to maintain its strong global position in the petrochemical and fertilizer market thanks to “competitively priced domestic feedstock under long-term contracts with Saudi Aramco.”

The report added: “These advantages help mitigate to an extent the volatility of its predominantly commodity-based petrochemical, fertilizer and steel activities and SABIC's asset concentration in Saudi Arabia.”

In a section on the PIF, Moody’s said the organization had a “high-quality investment portfolio”, a “very strong financial profile with very low leverage and very high interest coverage”, and an “excellent liquidity profile”.


NEOM Airlines set for take-off by end of 2024, CEO reveals

NEOM Airlines set for take-off by end of 2024, CEO reveals
Updated 24 March 2023

NEOM Airlines set for take-off by end of 2024, CEO reveals

NEOM Airlines set for take-off by end of 2024, CEO reveals

RIYADH: A dedicated airline for Saudi Arabia’s futuristic city NEOM will take to the skies by the end of 2024, the carrier’s CEO has revealed.

Writing in a blog post, Klaus Goersch set out an ambitious vision for NEOM Airlines, promising that passengers will receive “a completely different travel experience”.

Goersch, who has previously served as chief operating officer of British Airways and Air Canada, argued the new service will be “futuristic and efficient”, adding: “I can honestly say the opportunity here is way beyond anything else out there.”

The development of the airline comes as Saudi Arabia seeks to boost its aviation sector, with Crown Prince Mohammed bin Salman earlier this month announcing a new carrier, Riyadh Air, which will benefit from a $37 billion aircraft deal with US firm Boeing.

In his blog post, Goersch painted his vision for NEOM Airlines as he set out the “new future” for air travel.

He said: “Just imagine if your bags were collected from your home or office and delivered to the hotel or residence you were going to. 

“Imagine if biometrics were advanced enough to recognize you via facial recognition as soon as you walked in a building, security clearing you for travel without the need for even going through a gate – let alone having to bother with a visa. 

“And just imagine the time of your meeting changed by a few hours and you were able to change your flight to a later one, without hassle or cost. 

“Better still, imagine you are collecting loyalty points at the airport – where the whole place is lounge-style service – as well as while flying and when using the facilities in your destination, because everything is owned by the same company.”

Goersch went on to say the airline will initially retrofit existing aircraft in order to get the carrier up and running, before shifting to new planes. 

“Come 2026 onwards, there will be new innovative aircraft – whether it be electric, hydrogen-powered or supersonic – and next-generation interiors coming online from us. We are already in discussions with plane, interior and seat manufacturers,” he wrote.

In keeping with NEOM’s pledge to be environmentally-friendly Goersch said the airline’s ambition is for every flight to have “ some sustainable fuel onboard” originating from mixing facilities at NEOM. 

He added: “Sustainability will even stretch into the catering, with foods sourced locally from here and delivered via on-demand dining at a time when you actually feel like eating. 

“We will look at every single component right down to the carpets and single-use plastics. 

“Little things like this will accumulate and add up to more than the sum of their parts.”

The $500 billion NEOM megaproject is set to transform the Kingdom’s northwest Red Sea coast to a high-tech hub.