U.S. electric vehicle maker Lucid Group will set up its first overseas factory in Saudi Arabia, the company announced.
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When BlackRock, the world’s largest asset manager, announced this week it was adding the head of the world’s largest oil company, Saudi Aramco, to its board of directors, some investors might have been caught off guard given BlackRock’s leading role in the market when it comes to investing in a low-carbon future. But CEO Larry Fink, who has been under intense pressure for his embrace of ESG, specifically cited Saudi Aramco CEO Amin Nasser’s “understanding of the global energy industry and the drivers of the shift towards a low carbon economy.”
The Middle East, a region long known for its oil and gas riches, is investing in a new, more sustainable future potentially dominated by electric vehicles.
Saudi Arabia has been working on its own brand of electric vehicles, Ceer. It also owns about 60% of luxury EV maker Lucid Motors, into which its public fund recently invested another $1.8 billion.
The electric vehicle sector is booming in Israel, with electric vehicle deliveries in the first half of this year over 210% higher than the same period last year. In Bahrain, Gauss Auto, an American manufacturing corporation, partnered this year with Bahraini company Marson Group to open an electric vehicle manufacturing plant in the country.
“There’s a growing recognition that countries need to do something on climate,” said Tammy Klein, chairperson of the Electric Vehicle Council. “I think Middle Eastern countries are no different.”
“These government industry partnerships, we have them here in the U.S. too. We have them in Europe, and all over the world, not just on electrification, but on charging and on other fuels types. So what they’re doing is, I think, very standard. And I think it makes a lot of sense,” Klein said.
One of the latest initiatives to bring the EV future to the Mideast is a UAE partnership with Einride, an autonomous electric trucking company headquartered in Sweden and focused on the logistics market.
Just over a month ago, Einride, which ranked No. 13 on CNBC’s 2023 Disruptor 50 list, announced a partnership with the UAE Ministry of Energy and Infrastructure to establish sustainable shipping within the region. It’s just a memorandum of understanding at this point, but does mark Einride’s entrance into the Middle East and a plan to develop the region’s largest autonomous and electric fleet of trucks, which is expected to take five years to complete.
“This collaboration gets to the core of what Einride provides – the transformation to effective and sustainable shipping that is fully electric,” said Robert Falck, the company’s CEO and founder, in a statement.
Referred to as the Falcon Rise project, Einride plans to deploy a freight mobility grid ranging over 300 miles across Abu Dhabi, Dubai and Sharjah, made up of 2,000 electric trucks, 200 autonomous trucks and eight charging stations.
“By partnering on this deal, we’ll be able to showcase how entire regions are able to make the switch in an intelligent and cost-effective way,” Falck said.
Klein was positive on the strategic idea, if only an idea at this point. “I think Einride has a really interesting approach in terms of the portfolio that they’re offering for electrification and autonomy as well. And I think that what they offer is really particularly suited to a country like UAE, it’s very contained,” she said.
A common issue that arises when considering nationwide electrification is that of geographical makeup. A country’s natural geography and size influence the electrification challenge. For example, in the United States, a cross-country journey would require navigation of a vast landscape. The UAE, however, is a “contained country,” making it easier to fully electrify, Klein said.
Like the UAE, the Saudi government is also funding infrastructure to allow EV adoption to grow. Since 2021, the Saudi Electric Vehicle Charging Infrastructure Development Initiative (SEVCIDI) has been working towards a goal of installing 50,000 domestic charging stations by 2025.
Major auto players in the U.S. and China are also competing for a foothold in the Mideast EV market. GM is preparing to launch the Cadillac Lyriq, GMC Hummer EV and Chevrolet Bolt EUV in the Middle East this year, while Ford intends to launch EVs in the region in 2024.
China is moving into the region as well through its growing EV manufacturing sector. Saudi Arabia’s Ministry of Investment just signed a $5.6 billion deal with Human Horizons, a Chinese electric vehicle manufacturer. An investment vehicle owned by the UAE has a 7% stake in Nio, an electric car company based in Shanghai, after it invested $738.5 million in the EV maker last month.
Other Chinese EVs are spreading in the market, too, including Zeekr in Israel and China’s BYD, long backed by Warren Buffett’s Berkshire Hathaway, in Jordan.
Oil isn’t going away. Global oil demand will rise to 110 million barrels a day in about 20 years, pushing the world’s energy demand up by 23%, OPEC said last month. ″Oil is irreplaceable for the foreseeable future,” OPEC secretary general Haitham Al Ghais said while addressing the inaugural Energy Asia conference held last month in Kuala Lumpur.
Sanctions imposed by the E.U. and the U.S. “have dramatically shifted the flows of energy, but haven’t restricted or constrained them,” said Chevron CEO Mike Wirth at the recent Aspen Ideas Festival. “That’s why the price of oil is $70 today,” he said. “The market is still well supplied.”
The EV transition is coming, but the timing and the investments required are immense. Wirth noted that he has no doubt GM will make its target of no internal combustion engine vehicles being manufactured anymore by 2035, but the new supply chains that need to be created in batteries and upstream minerals and metals is a huge challenge.
Regardless, the partnership between Einride and the UAE, alongside the general wave of EV excitement, could pave the way for other countries in the region to take action and transition their own infrastructure to support electric vehicles and combat climate change.