Saudi Arabia electric vehicle market is projected to witness a CAGR of 35.27% during the forecast period 2024–2031, increasing from USD 9.25 billion in 2023 to USD 103.66 billion in 2031. The market has experienced significant growth in recent years and is expected to maintain expansions in the coming years due to an increase in the production of electric vehicles, growing awareness concerning the sustainable environment, the surge in technological advancement in EV batteries, and strict government policies concerning electric vehicles. The demand for electric vehicles in Saudi Arabia is increasing owing to rising investments by the government in a sustainable future and expansion in the network of EV charging platforms. For instance, in January 2024, Saudi Arabia announced an investment of USD 10 billion in Lucid Group, Inc., to set up a Saudi EV company, Ceer National Automotive Company, and build an EV metals factory, coupled with becoming competitive in the electric vehicle industry.
The electric vehicle (EV) market in Saudi Arabia is emerging as a pivotal element of the Kingdom’s Vision 2030, which seeks to diversify the economy and reduce dependence on fossil fuels. With a focus on sustainability and innovation, the Saudi government is promoting EV adoption through incentives, infrastructure development, and partnerships with global automakers. This report provides a detailed assessment of the Saudi Arabia electric vehicle market, segmented by component, vehicle type, charging type, propulsion, and region, while analyzing opportunities and offering a forecast from 2017 to 2031.
The Saudi EV market is in its early stages but is poised for significant growth, driven by rising environmental awareness, government support, and advancements in EV technology. In 2022, the market was valued at approximately USD 150 million, with projections to reach USD 7.8 billion by 2031, reflecting a compound annual growth rate (CAGR) of over 50% from 2023 to 2031. Initiatives like the Saudi Green Initiative and investments in renewable energy bolster the EV ecosystem, aligning with the Kingdom’s goal to achieve net-zero emissions by 2060.
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By Component
The EV market is supported by key components critical to vehicle performance:
- Battery: Dominating the component segment, batteries (primarily lithium-ion) account for over 40% of EV costs. Local production efforts, such as those by Saudi Aramco and SABIC, aim to reduce reliance on imports and lower costs by 2031.
- Electric Motor: Motors are essential for propulsion, with demand growing as EV adoption rises. Innovations in efficiency and power density are key market drivers.
- Controller: These units manage power distribution and vehicle performance, with increasing integration of smart technologies enhancing their role.
- Power Inverter: Critical for converting DC to AC power, inverters are seeing advancements in compactness and efficiency, supporting market expansion.
- Others: Including chargers, wiring, and thermal management systems, this category supports the broader EV infrastructure and is expected to grow with rising demand.
By Vehicle Type
The market is divided into two primary vehicle categories:
- Passenger Vehicles: Leading the market with over 70% share in 2023, passenger EVs benefit from consumer demand and government incentives. Models like Tesla’s Model 3 and Lucid Motors’ Air (backed by the Public Investment Fund) are gaining traction.
- Commercial Vehicles: This segment, including electric buses and delivery vans, is expanding due to smart city projects like NEOM and government fleet electrification goals. Growth is projected to accelerate post-2025.
By Charging Type
Charging infrastructure is a critical factor in EV adoption:
- Trickle Charge: Slow charging (typically 220V) suits overnight residential use but is limited by time constraints, holding a smaller market share.
- AC Charge: The most common type, AC charging (Level 2) supports home and workplace stations, with widespread deployment expected by 2031.
- DC Charge: Fast-charging stations (Level 3) are pivotal for long-distance travel and commercial use. The Kingdom aims to install 5,000 DC chargers by 2030, driving this segment’s growth.
By Propulsion
EV propulsion technologies define market dynamics:
- Battery Electric Vehicles (BEVs): Fully electric, BEVs dominate with over 60% market share in 2023, supported by advancements in battery range and charging infrastructure.
- Hybrid Electric Vehicles (HEVs): Combining electric and combustion engines, HEVs serve as a transitional technology, appealing to consumers hesitant about full electrification.
- Plug-in Hybrid Electric Vehicles (PHEVs): Offering flexibility with electric and fuel options, PHEVs are gaining popularity in urban areas with limited charging access.
- Fuel Cell Electric Vehicles (FCEVs): Powered by hydrogen, FCEVs are nascent but hold potential with Saudi Arabia’s green hydrogen ambitions, such as the NEOM project.
By Region
The EV market varies across Saudi Arabia’s regions:
- Northern and Central Region: Riyadh and NEOM lead adoption, with significant investments in charging networks and smart city integration.
- Western Region: Jeddah and Makkah benefit from high population density and tourism, driving demand for passenger EVs and charging stations.
- Eastern Region: Industrial hubs like Dammam focus on commercial EVs, supported by logistics and energy sector needs.
- Southern Region: Less developed but with potential for growth as infrastructure expands.
Opportunities
The Saudi EV market offers substantial opportunities:
- Government Support: Subsidies, tax exemptions, and the goal of 30% EV adoption in Riyadh by 2030 create a favorable environment.
- Lucid Partnership: The Public Investment Fund’s USD 1 billion investment in Lucid Motors, including a manufacturing plant in Jeddah producing 150,000 vehicles annually by 2030, boosts local production.
- Charging Infrastructure: Plans for 100,000 charging stations by 2030 address range anxiety and support market growth.
- Green Hydrogen: Integration with the Kingdom’s hydrogen strategy enhances FCEV prospects.
Challenges
Key challenges include:
- Infrastructure Lag: Limited charging stations (fewer than 500 in 2023) hinder widespread adoption.
- High Costs: EVs remain expensive compared to traditional vehicles, despite subsidies.
- Consumer Awareness: Low familiarity with EVs slows market penetration.
- Climate Conditions: Extreme heat impacts battery performance, requiring tailored solutions.
Forecast (2017–2031F)
From 2017 to 2022, the market saw initial steps with pilot projects and policy frameworks. Post-2023, growth accelerates, driven by Lucid’s production, Tesla’s market entry, and infrastructure rollout. By 2031, passenger BEVs are expected to lead, with commercial EVs gaining share as fleets electrify. The market could surpass USD 7.8 billion, with DC charging and battery components driving value.
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Conclusion
Saudi Arabia’s electric vehicle market is on the cusp of a transformative phase, supported by Vision 2030, strategic investments, and a shift toward sustainability. While challenges like infrastructure and costs persist, the opportunities — particularly in local manufacturing and green technology integration — are immense. By 2031, the Kingdom could emerge as a regional EV hub, balancing domestic needs with export ambitions and advancing its sustainable mobility goals.
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