Saudi Arabia, which has almost no car industry and is awash in black money, cannot sit still in the face of a global car boom.
The Saudi government has reportedly set a target for electric vehicles: the capital, Riyadh, is expected to have at least 30% of them by 2030.
The policy surprised many netizens, as gasoline in Saudi Arabia is even cheaper than water, at 2.3 yuan per liter. It can be understood that when driving in Saudi Arabia, the fuel consumption of 20L per 100km is comparable to that of our country. Driving in Saudi Arabia doesn't hurt to start with the floor oil. So Arab drift has a broad domestic market.
Why Saudi Arabia wants to enter the electric car market is related to its domestic industrial layout and the surge of new energy vehicles.
Recently, Tesla's market value broke a trillion dollars, and Ningde Times, a giant Chinese battery manufacturer, monopolized more than 30% of the global power battery supply. These are all stimulants.
In fact, Saudi Arabia is not without a plan for the electric car era. The largest shareholder behind Lucid Motors, one of the hottest "new car makers" in the United States, is the Saudi sovereign wealth fund, which once held more than 67 percent of the shares, but later diluted to 49.25 percent.
On July 26, Lucid Motors listed on nasdaq via SPAC(special purpose acquisition Company). At its last closing price of $26.85, Lucid Motors has a total market capitalization of $43.5 billion. The Saudi sovereign wealth fund's holdings are valued at more than $21.4 billion.
The investment has also enriched Saudi Arabia's sovereign wealth. In 2018, Saudi Arabia's sovereign wealth fund reportedly took a 67% stake in the company for $1.3 billion. At its latest market value, the Saudi sovereign wealth fund's investment was worth more than $20 billion.
And, in an interesting twist, Saudi Arabia owes the money to China's LeEco boss, Jia Yueting.
Lucid Motors, formerly Known as Atieva, fell into financial trouble in 2013 and brought in BAIC and LeEco. Baic soon withdrew its investment due to strategic adjustment. Under leEco's leadership, Atieva changed its name to Lucid Motors, adjusted its direction and began to develop luxury pure electric vehicles. In December 2016, Its first production model, Lucid Air, was officially released.
The new car was supposed to go into mass production by the end of 2018, but Lucid Motors was sold by Jia after the LeEco crash. It was then taken over by Saudi Arabia, which invested $1 billion to build its first factory in the United States, and then turned the tide, making Saudi Arabia a fortune.
After Taking over Lucid Motor, Saudi Arabia's bigger plan is to introduce automobile industry production line in Saudi Arabia, and Lucid will also start production and build a plant in Saudi Arabia later. However, it is still in the negotiation stage and there is no definite date yet.
However, Saudi Arabia is a big oil country, that is, only oil, other industries are relatively short, the car industry is even more miserable.
Saudi Arabia has 200 cars per 1,000 people in a population of 30m, but it has no car industry and relies almost entirely on imports. In 2019 alone, the kingdom imported more than 600,000 vehicles.
Saudi Arabia hopes to build a car factory to attract the employment of its youth, but no car factory is willing to build a factory in Saudi Arabia, the reason is that the cost is too high, and Saudi Arabia's per capita GDP is more than $20,000, the labor cost of car companies can not afford.
In 2017, Saudi Arabia wanted Toyota to build a plant there, but Toyota quickly gave up after an investigation, citing high costs. There is no domestic automobile supply chain, and even batteries, glass and tires have to be imported. The cost is really too high, and even if manufactured, there is no price advantage.
The Saudi auto import market, with a 5% tariff, offers no competitive advantage for local production. Toyota has concluded that unless it receives a 50% government subsidy, its costs will be on par with those in other countries, but there is still no guarantee of profitability.
For a variety of reasons, Saudi Arabia is so rich that it does not have a single car brand of its own. Therefore, Saudi Arabia is also betting on the new energy vehicle market. However, objective conditions for the construction of the automobile industry do exist, betting on new energy vehicles can bring changes to it, only time will give the answer.
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