Saudi Arabia's Industry Transformation: 160 Vehicle Plants
RIYADH: Saudi Arabia is breaking the mold! Despite its history with the oil industry, the Kingdom is embracing change and positioning itself as a pioneer in the global economy. Say goodbye to the status quo, because Saudi Arabia is ready to lead the way into the future! With 160 vehicle factories now operational in the Kingdom, producing a wide range of cars, engine parts, and accessories, Saudi Arabia is embracing the new reality of electric vehicles (EVs) and driving innovation in the sector.
According to the Saudi Ministry of Industry and Mineral Resources, these factories include 33 for parts, accessories, and engines, 21 for vehicles and structures, and 106 for trailers and semi-trailer vehicles or trucks. Along with optimized cost structures, these plants provide a strong infrastructure to support innovation-driven use cases within the Kingdom, as highlighted in a recent report by leading management consultancy firm Arthur D. Little Middle East.
The timing couldn't be better, as car sales in Saudi Arabia are expected to grow at a compound annual rate of 24 percent by 2025. "Electric vehicle manufacturing facilities are necessary to stimulate local demand through competitive pricing and a quicker time to market," says Joseph Salem, Partner at Arthur D. Little Middle East. "In addition, they play a key role in serving neighboring nations while taking regional specifications into account. Furthermore, the establishment of EV manufacturing facilities can also create job opportunities and boost the economy of the region," Salem added.
With a target of producing about 300,000 cars by 2030 and accounting for 50 percent of car sales in the Gulf Cooperation Council countries by 2025, Saudi Arabia is making significant strides in the EV market. Currently, out of the 1.15 million cars sold in the Kingdom, 62,000 are electric cars, and the National Center for Industrial Development projects that EVs will account for between 5 and 7 percent of the growth in the Kingdom.
Several major manufacturing projects are currently underway in Saudi Arabia, including Lucid and Ceer, both dedicated to EVs, and SNAM for conventional cars. In January 2022, the Saudi National Automotive Manufacturing Co. (SNAM) laid the foundation stone for the first car assembly plant in Jubail Industrial City, with a production capacity of 30,000 cars annually. Two months later, US-based Lucid Motors signed agreements to build a production factory in the Kingdom with an annual capacity of 155,000 zero-emission EVs, receiving financing and incentives of up to $3.4 billion over the next 15 years.
"We are keen to achieve high and sustainable human capital localization in line with Vision 2030. With our recently launched Lucid Future Talent program, in collaboration with the Human Resources Development Fund, we plan to provide the right training to enrich and prepare local talent to fill future job opportunities in the Kingdom," says Faisal Sultan, Managing Director and VP of Lucid Middle East.
In addition to these projects, Emaar The Economic City announced in November 2022 the sale of an industrial plot to Ceer National Automotive Co. to build a specialized factory for EVs, valued at $95.53 million. Once completed, the manufacturing facility is expected to create thousands of direct and indirect high-skilled jobs, with construction set to begin in early 2023.
These efforts by Saudi Arabia to invest in research and development, provide incentives and regulations, and promote sustainable development in the automobile industry are part of its larger strategy to diversify its economy and reduce its dependence on oil exports. The Transport General Authority (TGA) of the Kingdom is playing a crucial role in driving these initiatives, using data and technology strategically to encourage investment and sustainable growth.
Salem, a visionary leader in the transport industry, understands the importance of balance between swift implementation and careful analysis of regulations. With the Kingdom's ambitious Vision in mind, Salem stresses the need for a proactive approach to ensure that regulations align with the Kingdom's goals and lead to positive outcomes for the transport industry and society as a whole.
As Saudi Arabia aims to become a major player in the global automotive industry, Salem highlights the Kingdom's strategic location and investments in advanced technologies. These initiatives are designed to position Saudi Arabia as the leader in the regional automotive ecosystem, driving innovation, economic growth, and job creation.
Saudi Arabia is boldly setting its sights on the future with ambitious targets to achieve 45 percent clean mobility and an impressive 25 percent autonomous mobility penetration by 2030. The Kingdom's commitment to cutting-edge automotive technologies and sustainable transportation is not only visionary but also incredibly promising. With exciting developments and advancements taking place in the automobile sector, the future of Saudi Arabia is poised to be a beacon of progress and innovation. Embracing a greener, smarter, and more efficient mode of transportation, the Kingdom is paving the way for a brighter tomorrow, where sustainability and cutting-edge technology go hand-in-hand.
Sultan passionately stated. "We are proactively embracing change and actively strategizing for a better tomorrow." With a visionary outlook, Saudi Arabia is taking bold steps to adapt to the shifting landscape of the automotive sector, demonstrating its commitment to innovation and progress.
