Electric Vehicle Adoption Accelerates in Oil-Rich Saudi Arabia

 

Electric Vehicle Adoption Accelerates in Oil-Rich Saudi Arabia

RIYADH – Hamed al-Rafidain, a Saudi human resources professional, finds an electric vehicle (EV) to be a cost-effective choice, especially since his other car is a gas-guzzling SUV favored by many in the desert kingdom. At 39, Rafidain is part of a nascent yet expanding group of EV enthusiasts in Saudi Arabia, a nation aiming to become a technology hub as it diversifies its economy away from oil dependence.

 

Though still modest compared to the United States and China, the EV market in Saudi Arabia, the world's largest oil exporter, tripled last year, reaching nearly 800 vehicles, according to Saudi business news outlet Al-Iqtisadiyah.

 

“Financial considerations were my primary motivation for purchasing an electric vehicle,” said Rafidain, who spends up to 2,000 riyals ($530) monthly on fuel for his off-road vehicle. “Maintenance costs are also lower compared to a conventional vehicle—no oil changes and no brake-pad replacements,” he added, pointing to the engine-free storage space under the hood of his new car.

 

Chinese EV giant BYD is expected to dominate the Saudi market, while Tesla, its American counterpart, has no dealerships in the Gulf kingdom. Riyadh, home to eight million residents, suffers from traffic congestion that contributes to high pollution levels. Rafidain, driven by environmental concerns, noted that electric vehicles “help reduce global warming in cities.”

 

For a little over $53,300, he purchased a BYD, which he primarily uses for short trips within the capital.

 

**Charging Infrastructure**

 

The limited charging infrastructure and Saudi Arabia's vast expanse mean that many see their EVs as suitable for shorter journeys rather than as replacements for conventional vehicles. “Using an EV for travel outside the city is a gamble, especially since the infrastructure is still underdeveloped,” Rafidain explained, noting that the current battery range is only about 400 kilometers.

 

While BYD and Lucid install charging stations directly at customers’ homes, the Electric Vehicle Infrastructure Company (Eviq) is working to establish 5,000 stations across the country by 2030. EV prices remain high in Saudi Arabia, where fuel costs are lower than in most countries, with a liter of petrol costing $0.62.

 

A Lucid vehicle, from the company that opened a factory in Jeddah last year following a billion-dollar Saudi investment, costs $92,000. However, the entry of BYD is anticipated to make EVs more affordable.

 

Industry expert Hossam Iraqi highlighted that EVs are less popular among Saudis due to their size and performance in extreme heat. “Most current electric vehicle production is small to medium-sized, which does not suit the needs of large Saudi families,” he said, adding that the Gulf region's extreme heat affects battery efficiency.

 

**Growing Demand**

 

Salesman Hassan Mohammed predicts strong EV sales this year, driven by increasing domestic and international demand. “More than one car brand has opened its doors in the kingdom and now offers after-sales service, which has encouraged consumers,” he noted at an exhibition in northern Riyadh, where Saudis test-drove cars.

 

Al-Iqtisadiyah reported in April that Saudi Arabia imported only 779 EVs in 2023, up from 210 the previous year, citing official Saudi statistics. The country is also ramping up domestic production. Saudi Arabia's sovereign wealth fund, PIF, now controls 60% of Lucid and has secured a deal with South Korea's Hyundai to establish a plant in the kingdom for both EVs and petrol-powered cars.

 

Additionally, the Saudi EV brand CEER, launched in 2022, plans to start production in 2025. Earlier this year, Saudi Industry Minister Bandar al-Kharif stated the country aims to produce 300,000 EVs annually, though no timeline was provided. Riyadh, targeting carbon neutrality by 2050, is also in discussions with battery producers.

 

For now, some still prefer hybrid vehicles, which use both batteries and petrol for longer distances. “The balance between electricity and gasoline is economical and convenient,” said Omar el-Shami, a 43-year-old Egyptian pharmacist, as he charged the car he bought for his wife. “Things may change in the future,” he added.