Saudi Arabia has hired advisers including Boston Consulting Group to explore establishing its own domestic electric-car maker, according to people familiar with the matter.
The project is linked to existing plans to build up automotive infrastructure in the country and boost local manufacturing, said the people, who asked not to be identified because the deliberations aren’t public.
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A spokesperson for Saudi Arabia’s sovereign-wealth fund said it is committed to stoking growth and diversifying the kingdom’s oil-reliant economy while declining to comment on specific projects.
The $400 billion Public Investment Fund has been active in the electric-vehicle space going back several years. It acquired a small stake in Tesla Inc. in 2018, and officials discussed supporting Elon Musk’s efforts to take the company private until the chief executive officer tweeted about his ambitions. The PIF sold almost all its Tesla shares before an epic rally that began in late 2019, though it’s now sitting on big gains from an investment in rival Lucid Motors Inc.
The PIF and Lucid have been in talks about building a factory near the Red Sea city of Jeddah, people familiar with the matter told Bloomberg News in January. The following month, the carmaker reached an agreement to merge with a special-purpose acquisition company and go public.
The emergence of battery-powered cars has inspired a range of new-vehicle projects from startups to state-owned enterprises such as Turkey’s Togg, which plans to launch several EVs in the coming years. While Saudi Arabia has more resources to shower on a project of its own, any new automaker would face a broad range of competitors sprouting up around the globe.
Saudi Arabia aims to agree on deals this year or next to expand local manufacturing, the head of the kingdom’s wealth fund, Yasir Al-Rumayyan, said during a briefing in Riyadh on Jan. 26.
“Now we’re in the process of looking at electric appliances,” he said. “In relation to cars, there is more than one project that we’re now looking at, and they will be executed this year or next year at the latest.”
(Updates with PIF comment in the second paragraph.)
–With assistance from Matthew Martin.