Cars drive along a busy street in Riyadh, Saudi Arabia on June 20, 2018 in Riyadh, Saudi Arabia … [+]
Getty Images
Riyadh is making a renewed effort to convince car companies to set up production lines in the country, as part of its wider economic diversification drive.
Investment Minister Khalid al-Falih told Reuters that talks are ongoing with a number of firms and the name of the first car manufacturer to set up a base in the Gulf kingdom will be announced before the end of the year.
“Following that there will be another one or two car manufacturers, and they will be cars of the future,” he added.
Al-Falih did not reveal which companies the government is talking to, but perhaps the most likely name is electric vehicle manufacturer Lucid Motors. The challenger to Tesla is partly owned by the Public Investment Fund, a Saudi sovereign wealth fund, and there has been speculation for some time that it could set up a factory near Jeddah.
“We hope they’ll chose the kingdom,” Al-Falih told Reuters. “It’s no secret they are evaluating the kingdom. They’re evaluating other countries and, at the end of the day, they’ll make up a decision.”
Previous efforts to attract auto makers to Saudi Arabia have made some progress but ultimately failed.
In 2012, Indian-owned Jaguar Land Rover launched a feasibility study “to determine the viability of setting up an automotive facility” in the country. Reports at the time suggested it was considering a plant to build 50,000 vehicles a year, in what was known as Project Fern.
This formed a key part of the Saudi government’s ambitious strategy to lure up to six manufacturers to the kingdom within a decade. In January 2013, the Middle East Economic Digest quoted an official at the National Industrial Clusters Development Program saying the country could be producing half a million cars a year within 10-15 years.
However, in 2015 Jaguar Land Rover scrapped its plans and, as yet, no other company has stepped in to take its place, although an Izuzu truck assembly plant was inaugurated in late 2012.
A handful of Middle East countries have well-established car manufacturing industries. The largest is in Iran, which produced 880,000 vehicles in 2020, according to data from the International Organization of Motor Vehicle Manufacturers (OICA). Morocco produces around 250,000 a year and Egypt a little under 25,000 a year.
