One of the last nations you would expect to join the electric vehicle revolution, Saudi Arabia, has announced its intentions to build and export EVs. The world’s largest oil-exporting nation, Saudi Arabia, aims to export over 150,000 EVs in 2026.
Saudi Arabia released its “vision 2030” strategy to reduce carbon emissions while putting the nation on track for stable economic growth.
The key word here is stable. With around 17% of the world’s crude oil reserves, Saudi’s economy largely depends on it, accounting for nearly half of the nation’s GDP.
However, as we have experienced over the past several years, oil prices can be extremely volatile. Oil futures turned negative for the first time on record during the early stages of the pandemic as demand sharply fell. Earlier this year, oil prices climbed back above $120 per barrel with limited supply capacity and soaring demand.
On top of this, as climate change becomes a priority around the globe, the question becomes, when will we see peak oil demand?
It’s been a record year in 2022 as countries around the globe work to reduce carbon emissions and achieve energy independence. As a result, renewable energy and electric vehicle deployment hit a new record and is already working to reduce emissions, according to new research. In fact, renewable energy sources entirely covered the global rise in electricity demand in the first half of 2022.
New policies in most major developed nations are paving the way for meaningful reductions in CO2 emissions. Saudi Arabia realizes this and is therefore looking to diversify its economic interests while investing in the nation’s future.
To broaden its exports from oil, Saudi Arabia announced it will build and export zero-emission EVs.
Less oil, more EVs coming out of Saudi Arabia
Saudi Arabia has been in the headlines after its decision with OPEC+ to cut oil production. However, the nation is setting its sights on a different market with electric vehicles.
The oil-rich nation announced earlier this year it had committed to purchasing at least 50,000 (and up to 100,000) EVs from Lucid Motors as part of its “Vision 2030” plan. The strategy includes bringing advanced EVs to Saudi Arabia while increasing non-oil GDP to 50% compared to 16% today.
Lucid revealed in 2018 that Saudi Arabia’s Public Investment Fund (PIF) invested over $1 billion in the EV startup, with rumors later swirling that the investment was contingent on Lucid building a manufacturing facility in the nation.
It looks like Saudi plans to reduce its oil dependence at least partially by exporting EVs. Abdulla Al-Swaha, Saudi’s Minister of Communications and IT, stated Wednesday:
In 2026, the Kingdom will manufacture and export more than 150,000 electric cars.
Al-Swaha reiterated that Saudi’s investment in Lucid “has placed the Kingdom among developed countries” with 61% ownership.
According to Khalid Al-Faith, Minister of Investments, construction began at Lucid’s EV manufacturing plant in May.
Saudi Arabia going all in on EVs? Well, I wouldn’t go as far as to say they are all in, but in my opinion, it’s a smart move from “the Kingdom” to diversify away from oil.
The nation is looking toward the future, and all signs point to electric vehicles continuing to outpace their gas-powered counterparts. Not only that, renewable energy is rolling out at a rapid pace. When oil hits peak demand and starts to reverse, Saudi wants to have a backup plan, and EVs make sense.
Electric vehicles are one of the fastest-growing industries right now and are expected to continue growing at an over 20% compound annual growth rate (CAGR) until at least 2030.
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