The electric vehicle market in the Middle East is still in its infancy. However, the global rollout of new electric vehicle models is accelerating its adoption in the region.
As governments and consumers embrace the transition away from the internal combustion engine.
A new study by Goldman Sachs predicts that electric vehicles will make up about half of new car sales worldwide by 2035. “While the electric vehicle sector is beset by some major crosscurrents, our strategists expect technology innovation to supersede these forces in the coming years,” says the report by Goldman Sachs Research.
Meanwhile, increased competition, government incentives and falling prices of battery-related products and vehicle components make EVs more affordable. The likelihood grows of at least some models becoming as cheap as vehicles with ICE engines before the year ends.
Elon Musk’s Tesla brand currently leads the Middle East EV market. Among the electric models available in the region are the MG ZS EV, Renault Zoe E-Tech and the Volvo XC40 Recharge Pure Electric, alongside the recently launched Swedish brand, Polestar.
Focus on the Deployment of Electric Vehicles
The increasing focus on electric vehicle adoption, including in the Arab Gulf states, is largely driven by national commitments to accelerate the transition from fossil fuels to renewable energy sources to achieve net-zero targets within the coming decades.
This transition will not happen overnight. However, the Gulf countries still need to increase greatly the number of charging stations available for these new vehicles — to give EVs sufficient range and to incentivise consumers to buy electric.
“The market for electric vehicles will likely grow across the region, driven largely by the continued government-led reforms, specifically in building infrastructure to allow consumers to travel long distances,” Tom Lee, managing director of MG Motor Middle East.
According to market research firm Mordor Intelligence, the Middle East and African electric vehicle market was valued at $40.25 million in 2021 and is expected to reach $93.10 million by 2027, registering a compound annual growth rate of more than 15 per cent during the forecast period.
Awareness Raising
The numbers are remarkable considering that the global EV market suffered a major setback during the COVID-19 pandemic, which saw the closure of several manufacturing units and the start of a global semiconductor chip shortage, which continues to impact industries to this day.
Sales of zero-emissions vehicles have since bounced back worldwide, doubling in 2021 from the previous year, marking a new record at just under 7 million cars — equivalent to 10 per cent of all car sales, according to the Global EV Outlook, published by the Electric Vehicles Initiative.
The same was the case in 2022, when global sales of EVs steadily increased, with 2 million cars sold in just the first quarter. This year, electric vehicle market revenues tend to reach $322.50 million.
“Education of consumers (in the region) has rapidly increased, driven by GCC countries’ renewable energy plans and the drop in the price of electric vehicles,” Lee said.
This awareness is likely to grow when the UAE hosts the UN Climate Change Conference, COP28, in November, coinciding with its “Year of Sustainability.” Lee says the UAE’s manufacturing plans are also a lucrative investment opportunity.
Currently, eco-friendly or hybrid vehicles make up some 50 per cent of the Dubai Roads and Transport Authority’s taxi fleet. A five-year plan has been launched to have only hybrid, electric or hydrogen-powered taxis on the emirate’s roads by 2027.
Launched in 2016, Ekar, the region’s first mobility company and self-drive super app, has jumped on the EV bandwagon, adding 10 Teslas to its fleet available for rent in Dubai and five additional Teslas available in Abu Dhabi’s Masdar City.
“EVs are exceptionally good cars for car sharing,” Vilhelm Hedberg, co-founder and CEO of Ekar, said.
More EVs on the road
“There are fewer moving parts in an EV compared to an internal combustion engine car, which has a ton of different opportunities for failure, maintenance and issues to arise, making the vehicle off-road time much lower in EVs.”
At present, there are about 325 charging stations for EVs across the UAE, catering for less than 1 per cent of all vehicles registered in the country. However, Hedberg believes the number of EVs on the road will rise over the next couple of years.
“There’s a global readiness equation that’s calculated for EVs and the UAE finds itself ranked eighth in the world,” he said. Norway, China, Germany, Singapore and the UK take the top five rankings for EV market share.
“(Because of) the very fact that the UAE has the infrastructure already beginning to be laid out, it is headed in the right direction.”
With total Saudi investments in EV production expected to reach $50 billion over the next decade, the hope is that at least 30 per cent of the vehicles on the road in Riyadh will be electric in the next seven years.
A Great Enthusiasm for Technology
“The Saudi public has a strong affinity for their cars. There’s so much enthusiasm for classic cars and for iconic car models,” a spokesperson for Ceer, Saudi Arabia’s first homegrown EV brand, told Arab News.
According to the spokesperson, Saudis “also have a strong affinity for technology” and, therefore, will look to adopt new concepts.
“You can find battery electric vehicles on the streets of Dammam, Jeddah and Riyadh even though many brands don’t sell BEVs officially in Saudi Arabia today,” the spokesperson said, referring to fully electric vehicles with rechargeable batteries and no petrol engine.
Claiming that Ceer’s research on consumer insights revealed a strong interest in the company’s portfolio of vehicles, the spokesperson said: “The interest is both due to the vehicle’s iconic design and infotainment features, but also due to a host of other factors, including value for money, total cost of ownership, and increasing awareness of topics related to sustainability.”
In 2020, there were more than 15 million registered vehicles in the Kingdom. Four-fifths of these were cars or light vehicles. According to the Saudi Energy Efficiency Center, the transport sector consumed about 21 per cent of the Kingdom’s total energy that year.
Saudi Arabia Plugs into the Future
With 61 per cent of shares, Saudi Arabia is the majority owner of Lucid Group through its Public Investment Fund or PIF. Set to be built in King Abdullah Economic City on the Red Sea coast, Lucid’s first overseas manufacturing plant will initially reassemble Lucid Air vehicle “kits” manufactured in Arizona, the US.
Eventually, the plant will build complete vehicles with a planned peak capacity of 150,000 vehicles a year. Saudi Arabia’s first homegrown EV brand, Crown Prince Mohammed bin Salman launched Ceer Motors late last year.
Backed also by PIF, Ceer will be the first automotive brand to produce EVs in Saudi Arabia. With plans to sell a range of vehicles for consumers both in the country and the Middle East and North Africa region. The first units will likely become available in 2025.
With a production target of 170,000 cars a year, Ceer has the potential to create up to 30,000 direct and indirect jobs in the region, and directly contribute $8 billion to Saudi Arabia’s GDP by 2034.
The Kingdom’s giga-projects, such as Qiddiya, Roshn and NEOM, have plans to deploy fleets of EVs, produced in time by the Lucid and Ceer factories in King Abdullah Economic City.
Throughout the event, Schneider Electric is highlighting its portfolio of EVlink chargers, including its latest EVlink Smart Wallbox charging stations. (Supplied)
To support the transition from traditional petrol engines to electric mobility, Mohamed Shaheen, KSA and Yemen cluster president at Schneider Electric, believes a strong energy management infrastructure is essential.
The EVlink smart charger launched in the region last year is just one of many next-generation products that will help build a more sustainable energy matrix for the future, he said.
Sustainable Automobile
According to Shaheen, although the cost of an eco-friendly vehicle is markedly lower today than before, simply increasing the number of EVs on the road will not be enough to reduce emissions.
“A smart and sustainable charging experience that can monitor, manage and eventually limit the use of EV charging devices to optimize energy consumption can help EVs become even cleaner,” he said.
According to Boston-based Energy Sage, charging an EV is about 3.5 times cheaper per mile than the cost of fueling up a petrol car.
“It is imperative to understand that — in the long term — EV charging is cost-effective,” particularly when steps happen to develop more sustainable production processes, Shaheen said.
However, despite the growing public readiness for EV adoption in the region, the deciding factor ultimately would be consumers’ willingness to swap their petrol engine vehicle for an electric option.
Surveys show that people are looking for “the reliability and comfort they are familiar to in traditional engines,” said Lee of MG Motors.
“With the falling prices of EVs and the increase in petrol prices, there has been a fundamental shift in the market.”
Fuel Cost Variations
Pointing to the fluctuations in fuel prices over 2022 as a factor that has influenced consumer decision-making, he said that by 2026 the region almost expects to sell 45,000 electric vehicles.
Fuel bills apart, EVs generally have a strong resale value, which is why more and more people are looking at them as a sound investment, according to Ekar’s Hedberg.
He drew attention to a survey commissioned by Audi Abu Dhabi, which found a change of sentiment among consumers, with 52 per cent of UAE residents considering buying an EV.
“But my view of the world is that people shouldn’t own cars,” Hedberg said. “They should treat cars like they treat clothing and interchange them for the various occasions that they need them for,” he said.
Studies show that every car shared removes 17 private cars from the road, he said.
In recent years, the car-sharing trend has caught on in European cities, resonating with people who want to lead a more sustainable lifestyle.
While the same cannot be true for the Middle East region yet, the consensus view of automotive industry executives is that EVs and new energy vehicles are the way forward.
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