Hajra Naz
Tesla will begin selling its vehicles in Saudi Arabia next month, marking the company’s official entry into the Kingdom. A shift like this gives clues to a potential thawing of relations between Tesla’s CEO, Elon Musk and the Saudi administration. This also means that Tesla will be operating in the Gulf region, the most prominent market for electric vehicles in the Middle East, although the company has previously expanded to other countries in the region as well.
The 2018 Fallout with Musk and Saudi Arabia
While some speculate that Tesla’s lack of presence in the country can be explained by their slow expansion strategy, their absence in the Kingdom is more readily attributed to the fallout of Musk’s infamous claim in 2018 where he said he had received funding from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), to take Tesla private. The deal never came through and led to investor lawsuits alongside the public spilling of heated discussions between Musk and PIF governor Yasir Al-Rumayyan.
In recent times, it does appear like things have changed with Musk having taken a more active role in former US President Donald Trump’s most recent election bid and subsequent term in office. The former president has also indicated a willingness to travel to Saudi Arabia, where his government hopes to persuade the kingdom to pour over a trillion dollars into the American economy, including spending on military gear.
Tesla’s Official Launch Event in Riyadh
Tesla’s launch event will take place on April 10 in Riyadh, where the company will present its newest models of EVs along with its solar-powered products. Besides, the company will also showcase its Cybercab self-driving features and an AI-powered humanoid robot, named Optimus, as part of its robot-centric efforts.
Post-launch, Tesla plans to open engagement pop-up stores in Riyadh, Jeddah, and Dammam from April 11 onwards. The company did say, however, that it would communicate further concerning the details of the KSA expansion in the upcoming weeks, including a major spend in 2025 and beyond.
Challenges in the Saudi EV Market
While Tesla’s entry into Saudi Arabia is a bold move, the local EV market remains relatively small. A 2024 report from PwC estimates that EVs make up just 1% of total car sales in the country.
Despite Saudi Arabia’s ambitious plans to develop its EV industry, challenges such as limited charging infrastructure and consumer preference for fuel-powered vehicles, due to cheap gasoline and long desert roads, persist.
Competition from Existing Players
Tesla’s Saudi launch also comes amid rising competition. Chinese EV giant BYD and Lucid Motors (backed by PIF) already operate in the Saudi market. Just a month after Musk’s feud with the PIF became public, the sovereign fund announced a $1 billion+ investment in Lucid, making it the majority investor in the American EV startup.
Additionally, PIF has invested in Ceer, a domestic EV brand expected to enter the market soon. However, for now, gas-guzzling SUVs and luxury sedans remain the dominant choice on Saudi roads.
Easing Tensions and What’s to Come
Last November, when Musk was seen sitting next to Trump and Al-Rumayyan during a UFC MMA event in New York, it was clear progress had been made. Furthermore, in an attempt to capture the attention of the Saudi elite, he famously shocked many by attending the Future Investment Initiative event in Riyadh through a livestream.
Moreover, the American jury exonerated Musk as he did not intentionally deceive the investors in regard to the ongoing legal battles over the privatization of Tesla. It seems Saudi Arabia has the most to gain from the deal, especially with these issues being settled, from the standpoint of branding the country as a key player in the global EV market.
Conclusion
Tesla’s the Kingdom of Saudi Arabia will mark a milestone for the company from the moment it is done, and it will surely fuel expansion in the Middle Eastern region. Despite the enduring hurdles, the impending surge in the EV industry, along with Saudi Arabia’s drive towards HVAC innovation, is promising. Next month, when Tesla makes its bid to crown its technology in Riyadh, the world’s gaze intently focuses on how the kingdom will facilitate the electric revolution.
