Dubai: Saudi Arabia’s ambitions to turn itself into an automotive manufacturing hub got another boost with the wealth Fund PIF signing upon South Korea’s Hyundai Motor Company for a car factory - including EVs - in the Kingdom.
The Public Investment Fund will hold 70 per cent in the venture while Hyundai, which is to hold 30 per cent, will also be the ‘strategic technology partner’ on the development of the new plant.
Total investments is estimated at $500 million plus. Saudi Arabia is the Gulf's biggest automotive market. "Partnering with Hyundai is another significant milestone for PIF in successfully enabling and accelerating the growth of Saudi Arabia’s automotive ecosystem – one of our 13 priority sectors," said Yazeed A. Al-Humied, Deputy Governor and Head of MENA Investments at PIF.
The joint venture, which was announced at the Saudi-Korean Business Forum, aims to manufacture 50,000 vehicles per year, including both fuel-powered and electric vehicles.
The groundbreaking for the plant is scheduled for next year, and production could start in 2026 itself.
- Statement issued by PIF
Saudi Arabia has been making some good strides in the automotive space, either through investments or through alliances such as the one with Lucid Group for full-fledged manufacturing capabilities in the country itself. The country's funds are also prominent in backing the EV company Rivian.
Hyundai makes a statement
For Hyundai, the move towards production within the Gulf makes ample business sense. The brand has been having a stellar run in terms of sales and winning over first-time buyers, and especially for its luxury marque Genesis.
“We are excited about the potential of this venture to drive significant advancements in vehicle production, fostering a sustainable and eco-friendly automotive future in the region," said Jaehoon Chang, President and CEO of Hyundai Motor Company, in a statement.
Bringing production directly into the Gulf will have 'immense' benefits on pricing and in creating a closeness to the brand, industry sources say. Of course, a lot would still depend on what models will be built in Saudi Arabia, but chances are that it could be the mid- and entry level options.
Our investment in vehicle manufacturing with Hyundai Motor Company is a pivotal milestone, aligning closely with our existing stakes in Lucid and Ceer Motors
What's in it for PIF
Expanding the Saudi domestic industrial base is a high priority for PIF, which is also tasked with finding investment opportunities closer to home. PIF announced recently the launch of 'Tasaru' (or the National Automotive and Mobility Investment Company) to localize automotive supply chains and manufacturing capabilities.
PIF along with the Saudi Electricity Company launched the 'Electric Vehicle Infrastructure Company', with plans to install over 5,000 electric car fast chargers across Saudi Arabia by 2030. "The localization of Hyundai’s vehicles will accelerate the development of Saudi Arabia’s automotive and mobility ecosystem and attract further investments to the sector and the wider economy," said a PIF statement.