The Middle East and Electric vehicles - A Market of Promising Opportunities

Keywords: Middle East and Electric vehicles

• The current article titled Middle East and Electric vehicles is a key article to define the importance of electric cars to the world.
• The openness of the Middle East region, specifically the Gulf countries, to electric cars is evident.
• The growth of the global electric car market is noticeable in conjunction with the world's goal of achieving zero carbon emissions.

Introduction: The Reality of Electric Cars Worldwide!

History tells us that the first electric car appeared and was patented in 1894, which means that it was not late in its appearance after the first car that runs on traditional fuel, but the demand for these cars decreased significantly with the Ford gasoline-powered car in 1908, which proved its effectiveness and low costs compared to the electric car at the time.

However, interest in electric cars returned over time, specifically in the sixties and seventies of the last century in light of the energy crises and high prices, which posed a major threat to the traditional car sector, which prompted the US Congress in 1976 to pass the Electric and Hybrid Car Research, Development and Experimentation Act, after which great efforts were launched in this sector, whose popularity increased after 2008 (1).

The global market share of electric cars in passenger car sales increased between 2010 and 2022, reaching 14% in 2022. (2)

                                                                                The Middle East and Electric vehicles – figure 1

It is estimated that during 2023, more than 14 million electric cars will be sold around the world, and this volume is expected to increase significantly, especially in light of the scenario of net zero emissions by 2050, which the world hopes to reach in that year, driven by the move towards clean energy, one of which is the move towards electric cars (3).

According to the previous scenario, electric car sales are expected to approach 104 million electric cars by 2035, according to statista.(4)

With this remarkable revolution in electric cars, it was imperative for countries with advanced economies to pay attention to this sector, such as the United States and China, which dominate the list of the largest electric car manufacturers, led by the American company Tesla, which represents more than 70% of the electric car market in terms of market value, with a value exceeding $860 billion in October 2024.(5)

These numbers and facts about this important market prompt attention to its size in the Middle East region in particular.

The Middle East and Electric Vehicles: The Market of Opportunities and the Future

According to the Electric Vehicle Charging Index 2024 report issued by global consulting firm Roland Berger, the sector faces many structural and regulatory problems, whether in terms of rising electricity prices driven by inflation, or in terms of the financial strain that governments see in the size of the infrastructure required for this sector. (6)

Although the report indicated a decline in electric vehicle sales in 2023, it pointed to both the Middle East and Southeast Asian markets as exceptional markets that showed rapid growth.

The report provided some figures indicating the improvement witnessed by the infrastructure of electric vehicles in the Middle East, led by the Kingdom of Saudi Arabia and the United Arab Emirates, compared to a slight decline in infrastructure in the Americas and China.

According to a report issued by PwC on electric cars, the UAE has about 2,000 public charging points by 2024, with the market share of electric cars expected to exceed 15% of all sales in the UAE by 2030. (7)

You can see in the chart below the volume of electric car sales in the UAE from 2017 to 2029, according to the statista website (8)

                                                                                      The Middle East and Electric vehicles – figure 2

A Deloitte report indicated the prospects of electric cars in the Middle East, expecting this market to witness tremendous growth in the Middle East in the coming years, reaching about 7.65 billion US dollars by 2028, up from 2.7 billion US dollars in 2023, due to many factors, the most prominent of which are (9):

• Government initiatives to promote the use of electric vehicles.

• Increasing awareness about energy.

• Expanding fifth-generation communications networks.

• Implementing vision documents in the Kingdom of Saudi Arabia, the United Arab Emirates, Qatar and Kuwait.

As for the presence of electric car companies in the Middle East, the Deloitte report indicated an actual position that reflects the extent of interest in this region.

As new players in this industry choose the Middle East region through actual presence and building bridges of actual partnerships with local organizations, the most prominent of which, according to the Deloitte report, are the following:

• Chinese electric car manufacturer NIO obtaining an investment worth 1.1 billion US dollars from the investment company CYVN Holdings in Abu Dhabi to strengthen its budget and support its business growth.

• The Saudi Ministry of Investment is investing in a $5.6 billion partnership with Chinese electric vehicle startup Human Horizons to develop, manufacture and sell electric vehicles.

• The prominent Saudi investment in the Public Investment Fund-backed Lucid car company, which opened its first international factory in Jeddah in 2023.

In conclusion, after reviewing the importance of this sector on the one hand, and the extent of openness shown by the Middle East region to this vital industry on the other hand, two things become clear to us:

• The promising future surrounding this industry, both in terms of direct and indirect investments by governments and individuals.

• The vital position of the Middle East region, specifically the Gulf countries, and the global openness to this industry.

• The promising investment opportunities possible in this sector in terms of financial markets for individuals and institutions.

Resources: 

1. The History of Electric Vehicles: From Then to Now | EnergySage
2. Global Electric Vehicles Sales, 2010-2022 | The Geography of Transport Systems
3. Electric vehicles - IEA
4. Global EV sales forecast by scenario | Statista
5. Biggest Electric Vehicle Companies | What You Need to Know
6. EV Charging Index Edition 2024 | Roland Berger
7. eMobility Outlook 2024: UAE Edition - PwC Middle East
8. UAE: volume of electric vehicle sales 2029 | Statista
9. The Middle East goes electric! | Deloitte Middle East