![How the Mideast is preparing for post-oil, EV era of transportation How the Mideast is preparing for post-oil, EV era of transportation](https://i0.wp.com/image.cnbcfm.com/api/v1/image/107063635-1652951605711-gettyimages-1052808856-SAUDI_FII.jpeg?fit=%2C&ssl=1)
U.S. electric car maker Lucid Group announced that it will set up its first overseas factory in Saudi Arabia.
Javier Blass | Bloomberg | Getty Images
When BlackRock, the world’s largest asset manager, announced this week that it was adding the head of the world’s largest oil company, Saudi Aramco, to its board, some investors may have been caught off guard, given BlackRock’s market-leading position in investing in a low-carbon future. But CEO Larry Fink has come under intense pressure to embrace ESG, citing in particular Aramco CEO Amin Nasser’s “understanding of the global energy industry and the drivers of the transition to a low-carbon economy”.
The Middle East, a region long known for its abundance of oil and gas, is investing in a new, more sustainable future that could be dominated by electric vehicles.
Saudi Arabia has been working on developing its own brand of electric vehicles, Zell.It also owns about 60% of the luxury electric car maker Lucid MotorsIts public funds recently invested an additional $1.8 billion in the company.
Israel’s electric vehicle industry is booming, with deliveries of more than 210% higher than the same period last year.In Bahrain, US manufacturing company Gauss Auto is partnering with Bahraini companies this year Masson Group Opening of an electric vehicle manufacturing plant in the country.
“There is a growing recognition that countries need to act on climate,” said Tammy Klein, chair of the Electric Vehicle Council. “I think Middle Eastern countries are no exception.”
One of the latest initiatives to bring an electric vehicle future to the Middle East is the UAE’s partnership with Einride, a Sweden-based autonomous electric truck company focused on the logistics market.
Just over a month ago, Einride, ranked No. 13 on CNBC’s 2023 Top 50 Disruptors list, announced a partnership with the UAE Ministry of Energy and Infrastructure to build sustainable shipping in the region.
“These government industry partners, we also have them in the U.S. We have them in Europe and around the world, not only in terms of electrification, but in terms of charging and other fuel types. So I think what they’re doing is pretty standard. And I think it makes a lot of sense,” Klein said.
It’s just a memorandum of understanding for now, but it does mark Einride’s entry into the Middle East with plans to develop the region’s largest fleet of autonomous and electric trucks, which is expected to take five years to complete.
“This partnership gets to the heart of what Einride offers – the transition to efficient and sustainable all-electric aviation,” CEO and founder Robert Falck said in a statement.
The Einride program, dubbed Project Falcon Rise, plans to deploy a freight transportation network covering more than 300 miles across Abu Dhabi, Dubai and Sharjah, consisting of 2,000 electric trucks, 200 self-driving trucks and eight charging stations.
“By collaborating on this transaction, we will be able to demonstrate how an entire region can be transformed in a smart and cost-effective manner,” Falk said.
![Disruptor 50: Einride's mission for the future of electric trucks](https://i0.wp.com/image.cnbcfm.com/api/v1/image/107239584-5ED4-WEX-051123-Falck.jpg?w=640&ssl=1)
Klein is positive about the strategic idea, even if it’s just an idea. “I think Einride has also taken a very interesting approach in terms of the product portfolio they offer for electrification and automation. I think what they offer is really particularly suited to a country like the UAE, which is very closed,” she said.
A common issue that arises when considering electrification across the country is geographical composition. A country’s physical geography and size can affect electrification challenges. In the United States, for example, cross-country travel involves traversing vast landscapes. However, the UAE is a “closed country,” Klein said, making it easier to achieve full electrification.
Like the UAE, the Saudi government is funding infrastructure to promote the adoption of electric vehicles. Since 2021, the Saudi Electric Vehicle Charging Infrastructure Development Initiative (SEVCIDI) has been working towards the goal of installing 50,000 domestic charging stations by 2025.
Major U.S. and Chinese automakers are also vying for a foothold in the Middle East’s EV market. GM is preparing to launch the Cadillac Lyriq, GMC Hummer EV and Chevrolet Bolt EUV in the Middle East this year, while Ford plans to launch electric vehicles in the region in 2024.
China is also entering the region with its growing electric vehicle manufacturing industry. Saudi Arabia’s Ministry of Investment has just signed a $5.6 billion deal with Chinese electric car maker Human Horizons. A U.A.E.-based investor invested $738.5 million last month in Shanghai-based electric vehicle company NIO, which holds a 7 percent stake.
Other Chinese EVs are also gaining popularity in the market, including Zecre Israel’s BYD and Jordan’s BYD have long been backed by Warren Buffett’s Berkshire Hathaway.
Oil is not going away. OPEC said last month that global oil demand would rise to 110 million barrels a day in about 20 years, driving a 23 percent increase in global energy demand. “Speaking at the inaugural Asian Energy Conference in Kuala Lumpur last month, OPEC Secretary-General Haytham Ghaith said oil was irreplaceable for the foreseeable future.
Sanctions imposed by the EU and the U.S. have “drastically changed energy flows, but have not restricted or constrained them,” Chevron Chief Executive Officer Mike Voss said at the recent Aspen Ideas Festival. “That’s why oil is at $70 today,” he said. “The market remains well supplied.”
The EV transition is coming, but the timing and investment required are enormous. Voss noted that he has no doubts that GM will achieve its goal of no internal combustion engine vehicles by 2035, but the need to build new supply chains in batteries and upstream minerals and metals is a huge challenge.
In any case, the partnership between Einride and the UAE, combined with the general enthusiasm for electric vehicles, may pave the way for other countries in the region to take action and transform their national infrastructure to support electric vehicles and combat climate change.
Svlook