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Electric Vehicle Markets Emerge in Oil-Rich UAE and Saudi Arabia
Although the UAE and Saudi Arabia are rich in oil, they have begun embracing electric vehicles in recent years.
When people think about the Arabian Gulf countries and the rest of the Middle East, they often associate them with oil.
The Middle East has been instrumental in shaping the world’s energy economy since the middle of the 20th century, and it continues to play a crucial role in global oil politics.
Although oil still constitutes the main source of national revenue and domestic fuel of all Arabian Gulf countries, new renewable energy and clean transportation technologies, economic and energy diversification, concerns about pollution and climate change, and support for sustainable growth are now driving the new economic agenda of some of the oil-rich Arab countries.
In particular, the United Arab Emirates (UAE) and Saudi Arabia are becoming early adopters of electric vehicles (EVs) in the Arabian Gulf. And even though it is still cheaper in both countries to drive an internal-combustion engine vehicle than EVs, their efforts are encouraging.
The seventh largest exporter of crude oil, the UAE is also a regional leader in adopting EVs. Promoting itself as a country committed to a low-carbon and sustainable economy, the UAE has an ambitious goal to boost its EV market in the next 20 years.
The Emirati government aims to boost its own EV use by 20 percent this year as well as roll out 42,000 EVs across the country by 2030.
The UAE has the largest number of EV charging stations in the world.
Of the seven Emirates in the UAE, the highest concentration of charging stations is in Dubai, which boasts to have already installed 200 of them. The EV market is expected to grow in the country as the number of charging stations increase. In fact, the UAE – particularly Dubai – has the potential to become one of the global leaders in adopting zero-emission and electric vehicles.
At the forefront of the UAE’s clean transportation, Dubai has been successful with motivating its residents and businesses to use electric and hybrid vehicles as part of the Dubai Green Mobility Initiative, which promotes the use of low-carbon transportation.
To support the Dubai Clean Energy Strategy 2050, which seeks to produce 75 percent of the Emirate’s energy from clean energy, the Dubai Supreme Council of Energy mandated that 10 percent of all new cars in the Emirate must be electric or hybrid by 2020, and 10 percent of all cars should be green by 2030.
Since the launch of Tesla’s showroom in Dubai in 2017, the local government has been encouraging people to buy EVs over traditional cars.
There is now an array of EV choices in Dubai, including those made by Toyota, Mitsubishi, and Renault.
With 200 charging stations and counting, the Dubai Electricity and Water Authority believes that EVs will become not only more competitive with internal-combustion engines in coming years, but they will be 80 percent cheaper to charge than filling up a gasoline-run car.
EV users in Dubai enjoy a range of incentives and benefits, such as free charging stations until 2021, bonus warranty for EVs, discounted car registration and renewal, free parking in certain areas, toll exemptions, and savings of around 6,000 USD for owning such cars.
The authorities in the UAE have also provided incentives and a range of electric car choices for local businesses to begin using EVs. Businesses in Dubai now view EVs as beneficial to their branding and public image, in addition to showcasing their dedication to cutting greenhouse gas emissions.
While Saudi Arabia trails behind the UAE in adopting electric cars, EVs are slowly gaining traction in the kingdom.
Efforts to create a market for EVs are consistent with the Saudi Crown Prince Muhammed bin Salman’s Vision 2030 plan, which aims to reduce the country’s dependence on oil, diversify the economy, and implement a range of social reforms.
Because the transportation sector in Saudi Arabia uses nearly a quarter of its total energy, and the consumption levels are projected to rise in coming years, EVs would help meet the goal of cutting reliance on oil, increasing energy efficiency of cars, and reducing pollution.
Last year, Saudi Arabia installed its first commercial charging station for EVs in Riyadh. More charging stations are expected to come online this year.
In 2018, the state-run Saudi Electric Co signed an agreement with Japanese auto giant Nissan Motor, electricity equipment firm Takaoka Toko, and Japanese utility giant Tokyo Electric Power Co to install fast-charging stations for EVs in the kingdom.
Saudi authorities also began allowing their citizens to import EVs for personal use.
But because the country is at the early stages of adopting EVs, it has not established an incentive system similar to the one in the UAE, such as free charging stations, discounted car registrations, toll exemptions, and other perks.
The country will struggle to increase the share of the EV market until it can offer strong benefits to people.
EV use will also depend on the availability of charging stations.
Although the EV market in the kingdom is still small, Saudi investments in EV manufacturers abroad have been considerable.
The Public Investment Fund (PIF) – a Saudi sovereign wealth fund worth 320 billion USD – became a partner of California-based EV startup Lucid Motors in 2018 and poured 1 billion USD into it.
Prior to PIF’s investment, Lucid was struggling to raise funds to produce its electric car, Lucid Air.
Around the same time, PIF also agreed to back the U.S.-based EV-maker Tesla.
However, PIF sold almost all of its Tesla shares at the end of 2019.
Both the UAE and Saudi Arabia’s embrace of a progressive energy agenda is timely and commendable.
Compared to most of the Middle Eastern nations, these two rich countries have the wherewithal to build a robust EV market to meet their ambitious sustainability and energy diversification goals.
