Imagine driving through the vibrant streets of Riyadh in a sleek electric vehicle (EV), knowing you’re part of a transformative shift in Saudi Arabia’s economy. For Hamed al-Rafidain, a 39-year-old human resources professional, this is not just a vision but a reality. His decision to invest in an EV marks a significant step toward both financial savings and environmental responsibility, especially when compared to his traditional fuel-heavy four-wheel drive.
Saudi Arabia is witnessing a remarkable emergence of the EV market as it ambitiously strives to diversify its economy beyond oil. Despite being the largest oil exporter globally, the Kingdom’s EV market is expanding rapidly, with sales tripling last year to nearly 800 vehicles, as reported by local business sources.
Rafidain’s choice to switch to an EV was financially motivated, as he previously spent up to 2,000 riyals ($530) monthly on fuel. He highlights the reduced maintenance costs and the convenience of having extra storage space where the engine once was. The market dynamics are shifting, with Chinese EV manufacturer BYD expected to lead in Saudi Arabia, while Tesla has yet to establish a footprint in the region.
Overcoming Challenges: Infrastructure and Climate
Though the EV market is on the rise, challenges remain. The vastness of Saudi Arabia and the current lack of extensive charging infrastructure mean EVs are primarily used for shorter trips within cities. Rafidain acknowledges that venturing beyond urban areas is still a gamble, with current batteries offering a range of about 400 kilometers (250 miles).
Efforts are underway to address these challenges. While companies like BYD and Lucid are installing home charging stations, the Electric Vehicle Infrastructure Company (Eviq) aims to establish 5,000 charging points across the Kingdom by 2030. Despite the higher initial costs of EVs in Saudi Arabia, where fuel prices are relatively low, the introduction of more affordable models by companies like BYD could change the landscape.
Industry experts note that the size and performance of current EV models may not yet suit the needs of large Saudi families or withstand the region’s extreme heat, impacting battery efficiency. However, the industry is evolving, and solutions are being explored.
A Bright Future: Local Production and Global Ambitions
The future of EVs in Saudi Arabia looks promising. Salesman Hassan Mohammed is optimistic about the growth in EV sales, driven by increased local and international demand. With multiple car brands now offering after-sales services, consumer confidence is on the rise.
Official statistics highlight a significant increase in EV imports, from 210 in the previous year to 779 in 2023. Saudi Arabia is not just importing but also ramping up domestic production. The Public Investment Fund (PIF) now owns a majority stake in Lucid and has partnered with Hyundai to establish a local manufacturing plant. Additionally, Saudi EV brand CEER plans to commence production by 2025.
As part of its commitment to carbon neutrality by 2050, Riyadh is engaging with battery producers to further support this transition. While some consumers, like Omar el-Shami, still find hybrid vehicles more economical for longer distances, there is a growing anticipation that technological advancements will soon make full EVs the preferred choice.
Saudi Arabia’s journey toward a sustainable and diversified economy presents an exciting opportunity for investors worldwide. With its strategic initiatives and robust growth in the EV sector, the Kingdom is truly becoming a hub for innovation and green technology.
