Electric vehicle manufacturing competition revving up in Middle East

To:

Al-Monitor Pro Members

From:

Samuel Wendel

Senior Market Research Analyst, Al-Monitor

 

Date:

Jan. 13, 2023

Bottom Line:

2023 is expected to be a big year for the production of electric vehicles, or EVs. A wave of new electrified models are rolling out globally, delivered by storied automakers and startups alike, which comes as consumers and governments continue embracing the transition away from gas-powered vehicles. Industry activity is ramping up in MENA too, evidenced by Saudi Arabia recently launching Ceer, a new EV brand backed by the kingdom’s powerful wealth fund. Simultaneously, MENA produced a range of new EV ventures and developments in 2022, notably in the UAE and Turkey. With the UAE hosting COP28 in December, that trend could accelerate in 2023 and see regional players separate themselves from the pack. 

Background Facts:
  • Global EV market revenues are projected to reach $457.6 billion in 2023, according to Statista, with 8.6 million vehicles sold — up from 7.1 million units and $379.7 billion in 2022. Meanwhile, GCC EV market revenues are projected to reach $322.5 million in 2023, with 5,800 units sold. 
  • EV adoption in the Middle East is still fairly limited: for instance, Dubai had 5,107 registered EVs as of 2022, compared to 71 in 2015, according to the UAE’s state news agency. However, global EV makers are targeting regional sales. Notably, industry leader Tesla has a presence in Israel, Jordan and the UAE and looks to be expanding in Turkey. 
  • Turkey is a major automotive hub, producing over 1 million vehicles annually, according to Trading Economics. It also has TOGG, a homegrown EV brand that started production in October 2022. TOGG plans to manufacture 17,000 to 18,000 EVs in 2023 and the company’s CEO expects the project will contribute $50 billion to GDP over 15 years
  • Turkey also has Ford Otosan, a joint venture between Ford and Koç Holding, which in April 2022 began shipping an all-electric van to European customers and is now investing over $2 billion to increase EV production capacity. There’s also Karsan, a Turkish bus manufacturer that exports electric models to 16 countries. 
  • Saudi Arabia has flexed as an EV investor: in 2018, its Public Investment Fund (PIF) agreed to inject over $1 billion into US-based EV brand Lucid Motors, which has since gone public. Today, it’s Lucid’s largest shareholder with a roughly 60% stake. 
  • Other Gulf funds have targeted EVs too. For instance, in 2021 Abu Dhabi sovereign wealth fund ADQ participated in a $1 billion investment into an EV division of India's Tata Motors. In 2020, Qatar Investment Authority and Mubadala took part in a $900 million funding round into Chinese EV maker Xpeng Motors. 
  • In November 2022, Saudi Arabia launched its first homegrown EV brand Ceer, a joint venture between the PIF and Taiwan tech giant Foxconn. Ceer signed a land purchase agreement worth roughly $96 million to establish a manufacturing facility at King Abdullah Economic City (KAEC). Construction should begin in early 2023, with vehicles scheduled for availability in 2025.  
  • The kingdom expects Ceer, which plans to sell vehicles in Saudi Arabia and MENA, will attract over $150 million in foreign direct investment and help create up to 30,000 jobs. It also projects the venture will directly contribute $8 billion to GDP by 2034.  
  • In May 2022, Lucid announced it would establish its first overseas manufacturing facility in Saudi Arabia. Also located at KAEC, the factory will be capable of producing 155,000 units annually and initially re-assemble EVs pre-manufactured in the United States before eventually producing complete vehicles. Lucid also has agreements to provide financing and incentives of up to an estimated $3.4 billion over 15 years to build and operate the facility. In April 2022, Saudi Arabia’s government committed to purchase up to 100,000 Lucid EVs over a ten-year period.  
  • Saudi Arabia’s Minister of Investment told CNBC that Lucid’s factory is just the beginning, with the country in advanced discussions with other EV manufacturers and looking to attract EV battery companies and suppliers. Meanwhile, the Wall Street Journal reported in March 2022 that Foxconn and Saudi Arabia were discussing building a $9 billion facility to make microchips, EV components and other electronics. Reportedly, Foxconn was also exploring launching the project in the UAE instead. 
  • In June 2022, family owned Saudi conglomerate Abdul Latif Jameel committed to invest up to $220 million into India’s Greaves Electric Mobility, which makes electric rickshaws. The Jameel family is also US EV manufacturer Rivian’s third-largest shareholder.  
  • The UAE is also welcoming EV ventures. In March 2022, Dubai-based investment company M Glory revealed a roughly $400 million investment to develop the UAE’s first EV manufacturing facility. M Glory launched a temporary assembly line in October capable of producing 10,000 cars per year, with expectations to increase capacity to 55,000 annually in the next two years and export to the GCC, Egypt, Tanzania, Senegal, Mali and Kenya. 
  • In June 2022, Chinese EV company NWTN, which recently relocated headquarters to the UAE, announced an Abu Dhabi EV assembly facility serving MENA and Europe. The project’s first phase — set for completion in Q4 2023 — will have an annual capacity of 5,000 to 10,000 units, before increasing to 50,000 in 2024. NWTN also went public via SPAC in the United States in 2022, listing on Nasdaq after merging with a blank check company. 
  • Egypt’s President Abdel Fattah al-Sisi has said the country’s first locally assembled EVs would arrive in 2023. State-owned El Nasr Automotive Manufacturing Company planned to begin trial production of 100 EVs in 2022 before expanding capacity to 25,000 units annually, but negotiations to assemble them with Chinese auto firm Dongfeng collapsed. 
  • In November 2022, Bloomberg reported Egyptian billionaire Mohamed Mansour aims to produce 15,000 EVs in Egypt over the next three to five years through Al-Mansour Automotive, which is a long-time General Motors partner. 
Alternative Scenarios:

Scenario 1: The UAE delivers significant EV-related moves around COP28  

In the climate summit’s spotlight, the UAE produces new EV investments in 2023, ranging from boosting existing ventures to launching new companies, partnerships and funds linked to the industry.   

That said, although the UAE will push green initiatives around COP28, it hasn’t yet matched Saudi Arabia’s state-led strategic effort to develop the EV industry. 

Scenario 2: Saudi Arabia bets even bigger on EVs 

After launching Ceer and securing Lucid’s factory, Saudi Arabia scores new investments from other EV players in 2023 and the PIF stays active developing the sector. This establishes the kingdom as a rising regional EV manufacturing hub with global reach.   

However, Saudi Arabia’s EV manufacturing ambitions will likely face speed bumps. Other industry upstarts like Tesla and Lucid have faced production issues and missed targets. Developing Ceer from scratch into a leading regional EV maker won’t be easy as competition accelerates worldwide.  

Scenario 3: Middle East investors target global EV opportunities in 2023 

Amid global economic turmoil and depressed tech valuations, Middle East wealth funds flush with cash are well-positioned to pursue EV-related moves. 2023 could produce attractive investment opportunities, ranging from battery makers to charging solutions. 

Still, investors globally are now more attuned to EV opportunities. Although share prices of key publicly traded firms like Tesla and Lucid cratered in 2022, it was a big year for private equity investments into the EV ecosystem, reported SP Global, which points to potential dealmaking competition ahead.   

Conclusion - Most Likely Scenario:

Ultimately, the Middle East’s new EV brands won’t radically reshape local transportation in 2023, but this still offers a compelling moment for regional countries to seize EV opportunities as production ramps up worldwide. The real question is whether countries will see EV ambitions transition from aspirational to impactful. Turkey is the exception, thanks to an already robust automotive sector currently exporting EVs. Ahead of COP28, the UAE is a key player to watch — for the EV moves it makes or doesn’t. Saudi Arabia will likely continue engaging with global companies on EV-related moves in 2023, but the real test will be Ceer and Lucid avoiding delays scaling up local manufacturing. Either way, it appears a region known for fossil fuels can play a unique role in the global race to adopt EVs, with 2023 another busy year.  

Contributor Background:

Samuel Wendel is a senior market research analyst with Al-Monitor covering economic, tech and business trends across the Middle East. He has previously served as a journalist with Forbes Middle East and Wamda, where he reported on key industry developments spanning a range of sectors in the region.

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