November 13, 2023
The world’s largest oil producer, Saudi Arabia, is aiming to establish itself as a key hub for manufacturing electric vehicle (EV) batteries. The Saudi government, seeking to diversify its economy and develop a domestic auto industry, is exploring investments in EV battery production and the manufacturing of hydrogen-powered vehicles. Khalid Al-Falih, the Minister of Investment, highlighted the focus on the supply chain, envisioning EV batteries as a crucial manufacturing opportunity.
Seven years into Crown Prince Mohammed bin Salman’s initiative to reduce reliance on hydrocarbons, Saudi Arabia is intensifying efforts in manufacturing to diversify an economy still heavily dependent on oil-related exports. The country is also turning attention to renewable energy and mining minerals essential for battery chemical development, aiming to produce 500,000 EVs by 2030.
As part of building a broader network of suppliers for its emerging auto industry, the Saudi wealth fund has partnered with Pirelli SpA to construct a tire plant exceeding $550 million, serving companies like EV maker Lucid Group Inc and Hyundai Motors Co, both establishing plants on the country’s west coast.
In an effort to attract foreign talent and investment, Saudi Arabia has implemented restrictions, requiring state entities to conduct business with international companies that establish their regional headquarters in the country by January 2024. The target is to have 160 global companies run their Middle East operations from Saudi Arabia by the end of the year.
Minister Al-Falih mentioned that more than 180 licenses have been issued for companies qualifying for special incentives, with around 10 companies per week being licensed. Some banks, along with industrial companies, have made the kingdom their regional hub.
Saudi Arabia recently revised its estimates for foreign direct investment (FDI) into its $1.1 trillion economy, citing a change in methodology. Foreign inflows in the previous year are now estimated at $33 billion, over quadruple the earlier assessment of $8 billion.
Al-Falih expressed confidence in Saudi Arabia as an investment destination, dismissing concerns about potential investment pauses due to regional tensions, including Israel’s conflict with Hamas. He emphasized that Saudi Arabia meets all criteria as an attractive investment destination amid global uncertainties.
Source: The Edge Malaysia
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