Stepping up its manufacturing prowess, Saudi Arabia has started taking initial steps towards becoming a manufacturing hub for the automotive sector. The country has already announced that it is developing infrastructure for attracting three global automakers and is working on having its first car manufactured by next year.

Reports also surfaced last month about plans by the California-based Lucid Motors to set up an electric vehicle manufacturing plant in Saudi Arabia as part of its expansion in the region.

Jubail venture

In a recent interview with Al Arabiya TV, Mohammad Al-Zahrani, who is the director of Industrial Investment Development Department, said that the Royal Commission in Saudi Arabia’s eastern province of Jubail is developing infrastructure to attract three automakers from across the globe to the region.

In cooperation with South Korea’s SsangYong automotive, Saudi Arabia is well on its way to setting up an assembly centre and manufacturing its first car by 2022. Engineering designs for the first Saudi-produced car by 2022 are in advanced stages, he revealed.

Lucid: moving closer to the kingdom

The study that was conducted by the Royal Commission, said Saudi Arabia aims to attract nearly SR40 billion ($10.67 billion) as direct investments to the automotive industry by 2040. As per Al Zahrani, the automotive sector in Saudi Arabia will contribute nearly SR80 billion to the country’s Gross Domestic Product (GDP) and will create approximately 27,000 jobs.

Al-Zahrani also explained that Saudi Arabia’s upcoming auto complex is part of its strategic industrial plan, with Jubail Industrial City and Ras Al-Khair Industrial City providing over 90 per cent of the raw materials used in direct automobile manufacturing.

Lucid moving closer

Bloomberg reported last month that Lucid Motors Inc is in talks with Saudi Arabia’s sovereign wealth fund to build an electric vehicle factory -potentially near the Red Sea city of Jeddah.

The move would mark a significant expansion for California-based Lucid. Saudi Arabia is trying to become a Middle Eastern hub for manufacturing EVs as it diversifies its economy from oil.

The $360 billion Public Investment Fund, already a shareholder in Lucid, will provide much of the money for the site at the King Abdullah Economic City. Plans are advanced but could change, the people said. PIF and Lucid have also considered ‘Neom’, a new city being developed in the northwest of Saudi Arabia, as a possible site for the plant.

Lucid is one of a several US firms seeking to take on Elon Musk’s Tesla Inc. The startup is targeting the luxury end of the EV market and its CEO, Peter Rawlinson, was previously Tesla’s chief engineer on the Model S sedan.

Lucid raised more than $1 billion from the PIF in 2018, an investment that was conditional on the firm developing a site in Saudi Arabia. King Abdullah Economic City is about 97 kilometers north of Jeddah, the country’s second-biggest city.

Since then, Lucid has unveiled plans for the Air, a $169,000 sedan it says is capable of being driven more than 805 kilometers on a single charge. It has also built a factory in the Arizona desert and deliveries to US customers of the model are expected to start in the second quarter.

Lucid plans to produce a cheaper $75,000 version of its sedan in 2022, which will be able to travel more than 400 miles on a single charge, and build SUVs eventually.

Build local

The PIF is set to play a major role in Saudi development projects over the next few years as the government looks to cut spending and keep the budget deficit in check after oil’s coronavirus-triggered rout. Yasir Al Rumayyan, governor of the fund, said it will spend at least $40 billion locally this year and in 2022, Bloomberg said. Just five years ago it was a sleepy organisation with less than 100 employees. It now has 1,000 staff and ambitions to raise its assets to more than $2.5 trillion, according to Al Rumayyan. The PIF also invested in Tesla, before selling almost all its shares in early 2020.