Manufacturing

Saudi and Morocco vie for lead in Mena EV race

December 22, 2023, 4:11 AM

The Saudi PIF has pledged to buy up to 100,000 vehicles from US EV maker Lucid, in which it has a 60% stake

Pair accelerating electric vehicle drive
Deals with China and Korea
Citroën and Renault based in Morocco

Two clear frontrunners in the global electric vehicle race have emerged in the Middle East and North Africa region.

Both Saudi Arabia and Morocco have accelerated efforts to develop their EV capabilities in 2023, with a series of multi-million-dollar investments and partnership deals.

The two kingdoms see the EV industry as central to achieving economic diversification and net zero goals.

“Both countries have very strong EV ambitions,” Joshua Cobb, senior analyst in the automobiles team at BMI, told AGBI. “I expect them to increasingly compete against each other to attract EV-related investment over the medium term.”

Saudi Arabia has set a goal to produce 500,000 EVs annually by 2030 and it has unleashed the financial firepower of the $700 billion Public Investment Fund to make this a reality.

The PIF has pledged to buy up to 100,000 vehicles over a 10-year period from the California-based manufacturer Lucid, in which it has a 60 percent stake and has invested $5.4 billion since 2018.

It has also formed a joint venture with the Taiwan-based company Foxconn, best known as a supplier to Apple, to create Ceer, the kingdom’s own EV brand, which is due to launch in 2025.

The PIF announced in October that it had formed a partnership with the Korean carmaker Hyundai to invest about $500 million in building a plant with an annual production capacity of 50,000 EVs and hybrid cars. It is expected to come online in 2026.

“Saudi is pumping billions of pounds into its EV industry and using the PIF to entice a growing range of industry stalwarts by way of various joint ventures,” Zakia Subhan, head of Middle East and Africa production forecasting at LMC Automotive, told AGBI. Nonetheless, Subhan said, it would be surprising if the production targets were met.

Morocco’s goals

At the same time, the rapid growth of Morocco’s EV industry has been propelled largely by a local abundance of the minerals used in the manufacturing process, combined with a sophisticated automotive sector that is expanding its offering.

Citroën makes 50,000 EVs per year locally and is on track to start manufacturing 100,000 EVs a year by 2025, according to Ryad Mezzour, the Moroccan minister for trade and industry.

Renault makes 400,000 vehicles at its Tangier plant and is planning to start manufacturing the Mobilise Duo, a two-seater EV, in the coming months. The targeted capacity is 17,000 Duos per year.

Its Dacia brand is expected to start producing the Sandero, a 100 percent battery-powered EV, in Morocco in either 2027 or 2028.

The north African kingdom has the European market on its doorstep and access to it under a free trade agreement.

Furthermore, the US Inflation Reduction Act mandates that at least 40 percent of the value of critical minerals used in an EV’s battery must now be sourced from the US or one of its free trade partners to qualify for a $3,750 tax credit from the US.

As Morocco and the US also have a free trade agreement there has been a flurry of investments from Chinese companies who view the kingdom as a gateway to the US market and its tax credits.

China’s Gotion High Tech said in June that it would invest $6.4 billion to establish a new 100 gigawatt-hour EV lithium battery plant in the country.

Another Chinese company, CNGR Advanced Material, announced in September that it would join forces with Morocco’s Al Mada to invest $2 billion in a cathode materials plant.

The same month, Zhejiang Huayou Cobalt of China and the South Korean chemical maker LG Chem, the second largest battery manufacturer in the world, said they were teaming up to build a lithium refinery and cathode materials plant in Morocco.

“Chinese companies dominate this space and Morocco’s workforce needs to acquire the expertise of Chinese and South Korean companies, who have years of experience in carrying out manufacturing at large scale,” said Kevin Shang, senior battery analyst at the energy consultancy Wood Mackenzie.

Saudi supply chain

Saudi Arabia has also cut some notable deals this year to develop its materials supply chain.

In June, Saudi Arabia’s Obeikan Investment Group and the Australian startup European Lithium announced a joint venture to build and operate a lithium hydroxide refinery in the kingdom.

The following month, the Saudi state mining company Ma’aden and the US-based company Ivanhoe Electric closed a deal to investigate 48,500 sq km of under-explored lands in the Arabian Shield for lithium and other rare metals.

In September, the Saudi investment company Energy Capital Group announced a collaboration with the US tech startup Pure Lithium to develop batteries using lithium extracted from oilfield brines.

David Leah, senior analyst for powertrain forecasting at the UK-based company LMC Automotive, said: “Saudi doesn’t yet have an established supply chain base.

“However, because they’ve got very deep pockets, they’re building that up with investments into sourcing critical materials, establishing refineries, and so on.”