Surprisingly, Saudi Arabia is now in the EV battery game.
The objective is to diversify away from their almost sole export of petroleum products.
As the Saudi government searches for fresh approaches to diversify the economy and foster the growth of a homegrown auto sector, the largest oil producer in the world is now also seeking to establish itself as a major center for producing batteries for electric cars.
The next phase in Saudi Arabia’s ambitions to establish a hub for automobile manufacturing in the Middle East includes investments in the production of hydrogen-powered cars and EV batteries, according to the country’s minister of investment, Khalid Al-Falih, in a Bloomberg Television interview.
“The supply chain is the next big thing,” Falih stated on Wednesday in Singapore at the Bloomberg New Economy Forum. Authorities “aspire for EV batteries to be a major manufacturing opportunity in the supply chain.”
Seven years into Crown Prince Mohammed bin Salman’s campaign to wean the nation from hydrocarbons, the country is putting more emphasis on manufacturing after making little headway in diversifying its economy, which still depends more than 90% of its exports on oil and its near derivatives, plastics, and petrochemicals.
Saudi Arabia is currently concentrating on mining minerals required to create battery chemistry as well as renewable energy. Saudi Arabia has already established a 2030 deadline for generating 500,000 electric cars.
The Saudi wealth fund has reached an agreement with Pirelli SpA to construct a more than $550 million tire plant that would service businesses like EV manufacturer Lucid Group Inc. and Hyundai Motors Co., which are developing plants on the country’s west coast, as the kingdom looks to expand its network of suppliers around its fledgling auto industry.
Saudi Arabia prohibited state organizations from conducting business with foreign firms that do not have their regional headquarters in the kingdom by January 2024, as part of an attempt to draw in foreign expertise and investment. The goal is for 160 international corporations to manage their Middle East operations out of Saudi Arabia by the end of the year.
According to Al-Falih, more than 180 licenses have been granted to businesses so they can be eligible for exclusive benefits offered to those who establish regional headquarters. “The number of companies receiving licenses is increasing to the extent of ten per week,” he stated.
Al-Falih stated that certain banks, who wished to remain anonymous, had established the kingdom as their regional center, in addition to businesses that comprise industrial companies.
Due to a change in methodology, the monarchy substantially revised its projections for foreign direct investment into the $1.1 trillion economy on Wednesday. The current estimate for last year’s inflows is $33 billion, more than four times the $8 billion estimate from the prior assessment.
Saudi Arabia has “transitioned to the gold standard system of accounting per the IMF methodology, which is to actually measure the last dollar from the financial statements of all registered international investors in the kingdom,” according to Al-Falih. Previously, the kingdom relied on its central bank to estimate foreign direct investment.
The minister stated that, given the opportunity in Saudi Arabia, he is not concerned about a possible halt in investment flows into the region as a result of Israel’s battle against Hamas.
“We meet every requirement,” Al-Falih declared. “After considering the current state of affairs in Europe, the tension in the Middle East, and certain regions of Asia, people will find that Saudi Arabia is the best place to invest.”
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