PwC data shows that electric vehicles will account for only 1% of total car sales in Saudi Arabia in 2024. Saudi Arabia is developing its domestic electric vehicle manufacturing industry. It holds a majority stake in Lucid Motors, a California-based electric vehicle manufacturer. Tesla enters Saudi Arabia as it faces a sharp decline in sales. CEO Elon Musk faces strong opposition due to his controversial role in the Trump administration.
Tesla launches its sales operations in Saudi Arabia. This oil-rich kingdom mainly sees gas-guzzling SUVs on its long desert highways. Charging stations are scarce for hundreds of miles. The American electric vehicle manufacturer hopes for positive signals from its success in neighboring UAE and the growing number of electric vehicle buyers in the region. This timing is notable. Tesla will hold its launch event in Riyadh on April 10. It will open pop-up stores in Riyadh, Jeddah, and Dammam on April 11. This event occurs before the expected visit of U.S. President Donald Trump to Saudi Arabia, UAE, and Qatar in April, though this visit is not officially confirmed. Meanwhile, the manufacturer faces a sharp drop in sales, especially in Europe. Strong opposition arises against CEO Elon Musk’s controversial role in the Trump administration. Tesla’s announcement on its website states, “Explore our global best-selling lineup. Step into a world powered by solar energy, sustained by batteries, and driven by electric vehicles. Experience the future of self-driving with our Cyber Taxi and meet our humanoid robot Optimus. We will showcase the future of AI and robotics.” Though known for its oil wealth, Saudi Arabia is not new to electric vehicles. Since 2019, the Saudi Public Investment Fund has been a major shareholder in U.S.-based luxury electric vehicle company Lucid Motors. In 2023, Lucid opened its first manufacturing plant in Saudi Arabia.
Saudi Arabia, through its public investment fund and a joint venture with Foxconn, develops a local electric vehicle brand—Hill Automotive. Hill plans to sell in the Middle East market by 2025. Entering the electric vehicle manufacturing sector is part of Saudi Arabia’s Vision 2030. This initiative aims to diversify the economy and reduce oil dependence. Saudi Arabia likely views Tesla’s market entry as a move to advance its goals. As part of a broader strategy to halve emissions in Riyadh, Saudi plans to convert 30% of the capital’s vehicles to electric by 2030. Competition from China exists. Chinese electric vehicle manufacturer BYD has already entered the Saudi market. This means Tesla faces competition from BYD and Lucid Motors in a still-small market. A PwC report shows that in 2024, electric vehicles will account for only 1% of total car sales in Saudi Arabia. Tatiana Christova, S&P Global’s director of automotive sales forecasts for the Middle East and Africa, stated in an interview that Tesla will not be the pioneer in this market. In other countries, it often leads the way, but that is not the case in Saudi Arabia. She said, “BYD cars have recognition in the market, even if they aren’t the only electric vehicles available. This will be a tough start.” S&P predicts that Tesla’s sales in Saudi Arabia will reach 10,000 to 15,000 units in the first two years after entering the market. Hristova added, “After that, it will definitely face fierce competition from local manufacturers and Chinese cars.” Entering the Saudi market shows that Musk’s previously tense relationship with Saudi Arabia has improved. Before this, Tesla nearly entered all Gulf countries except Saudi Arabia. According to PwC’s consumer survey data from last year, over 40% of consumers in Saudi Arabia are considering buying an electric vehicle in the next three years. Saudi Arabia has few charging stations, but a newly established electric vehicle infrastructure company plans to build 5,000 fast charging stations nationwide by 2030, the report states. Hristova noted that there is a group of potential customers in Saudi Arabia who have been waiting for Tesla. This is another positive sign for Tesla’s local debut. She said, “We expect good demand for Tesla cars in the coming years. I always say, ‘What you can’t have, you want more.'”