The Surge of EVs in the MENA Region
As the GCC seeks to increase the number of electric vehicles on its roads to slash its carbon emissions, the region must also address the challenges to widespread adoption.
The global automotive industry is increasingly focusing on the vital role of electric vehicles (EVs) in lowering carbon emissions and addressing climate change. And as the world accelerates towards a greener future, the Middle East is taking steps to embrace EVs as a cleaner and more sustainable transportation option.
In the first quarter of 2024, global EV sales increased by approximately 25 percent compared to the same period in 2023, reflecting similar year-on-year growth observed in early 2022. This year, electric cars could capture up to 45 percent of the market share in China, 25 percent in Europe, and over 11 percent in the United States, based on a 2024 report by Global EV Outlook.
“The total cost of owning an EV is now approaching parity in the Middle East, which basically means it is equally affordable to drive an EV compared to an internal combustion engine car, and that obviously makes switching to electric more attractive,” Heiko Seitz, eMobility leader and partner at PricewaterhouseCoopers (PwC), tells Inc. Arabia.
EV Adoption is On The Rise in The GCC
The electric vehicle market in the Middle East is anticipated to experience significant growth in the next few years, with projections estimating it will reach US$7.65 billion by 2028, a substantial increase from $2.7 billion in 2023, based on a 2024 report by Mordor Intelligence.
Leading the transition in the region is the UAE, where the adoption of EVs is increasing. EVs could account for up to 25 percent of all new passenger cars and light commercial vehicle sales by 2035 – the equivalent of approximately 110,500 vehicles – as per PwC’s eMobility Outlook 2024: UAE Edition.
“The UAE, Saudi Arabia, and Qatar are the frontrunners of the electrification of mobility in the Middle East,” Seitz says.
As part of the UAE’s Energy Strategy 2050, the country aims to achieve carbon neutrality by mid-century through a mix of renewable and nuclear energy sources. In 2023, the UAE government announced updated objectives to ensure that 50 percent of the cars on its roads are electric by 2050.
“With the UAE’s focus on reducing carbon emission by 23.5 percent by 2030, it’s a major step towards diversifying from its oil dependency. That is a part of their nationally determined contribution,” Yasmeen Jawahar Ali, co-founder and COO at eDaddy, a sustainable urban mobility startup based in UAE, tells Inc. Arabia.
According to a 2023 report by the Dubai Water and Electricity Authority (DEWA), the number of EVs in Dubai surged to 25,929 by the end of December 2023, a significant increase from 15,100 in 2022.
In early 2024, DEWA launched the EV Green Charger initiative, which resulted in the installation of 100 EV charging stations throughout Dubai. The network has since grown to over 350 stations, with a goal of exceeding 1,000 by 2025.
“Consumer attitudes in the MENA region are becoming more positive towards EVs due to increased environmental awareness and rising fuel prices,” says Ibrahim Al-Bawaliz, co-founder of EVO, a Jordan-born mobile app that has made inroads into Saudi Arabia and facilitates access to charging stations across the Kingdom.
Similarly, Saudi Arabia is making considerable progress in its shift to electric mobility as part of its Vision 2030 strategy to diversify its economy and reach net-zero carbon emissions by 2060. According to PwC’s eMobility Outlook 2024: KSA Edition, the Kingdom has set an ambitious target to electrify 30 percent of all vehicles in Riyadh by 2030, as part of a broader plan to cut emissions in the capital by 50 percent.
“By aiming to have 30 percent of vehicles on the road be electric by 2030, Saudi Arabia is promoting cleaner transportation and reducing its reliance on fossil fuels,” Al-Bawaliz says.
The Saudi government is also investing in infrastructure to support the growth of EV adoption. In 2021, the Saudi Electric Vehicle Charging Infrastructure Development Initiative (SEVCIDI) announced plans to install 50,000 charging stations across the country by 2030.
Seitz highlights EVIQ – a joint venture between the Public Investment Fund (PIF) and the Saudi Electricity Company (SEC) – as one of the big charging operators in Saudi Arabia. Al-Bawaliz also points to the EVO app, which allows Saudi users to find nearby fast-charging stations easily, helping to make infrastructure more accessible.
Another forerunner in EV adoption in the GCC is Qatar, which established a network of over 100 EV charging stations across the country prior to the FIFA World Cup it staged in 2022. The FIFA World Cup in Qatar also featured the use of electric and hybrid vehicles, including 741 electric public buses. The country is currently operating over 900 electric buses nationwide, and it aims to convert all public transport vehicles to electric by 2030 in line with Qatar National Vision 2030.
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Joint Ventures For The Win
Several of the world’s leading electric vehicle manufacturers have set up operations in the MENA region, and they are now competing for market dominance. In 2023, Chinese electric vehicle manufacturer NIO received a $2.2 billion investment from Abu Dhabi’s CYVN Holdings to bolster its balance sheet and support its business expansion in Saudi Arabia.
Meanwhile, Saudi Arabia has also been working on its own brand of EVs called Ceer, which is expected to launch its first vehicle in 2025, with an annual production target of 150,000 cars.
"We have a very unique situation where Saudi Arabia, based on its Vision 2030, has decided to build a complete EV manufacturing industry from scratch,” Seitz notes.
Saudi Arabia’s PIF also owns about 60 percent of luxury EV maker Lucid Motors, which announced the opening of its first international manufacturing facility in Jeddah in 2023. The Kingdom has committed to purchasing up to 155,000 vehicles from Lucid over the next decade.
Additionally, the Ministry of Investment in Saudi Arabia has also forged a $5.6 billion collaboration with the Chinese electric car maker Human Horizons to design, produce, and distribute EVs.
In the UAE, through collaborations with local governments and businesses like Al-Futtaim, the Chinese EV manufacturer BYD has unveiled a new showroom and discovery center, which introduces a diverse selection of advanced new energy vehicles (NEVs), featuring fully electric and plug-in hybrid options, to cater to the increasing number of EV drivers.
A Bumpy Road
Despite such developments, challenges persist in the GCC regarding the affordability of EVs, inadequate charging infrastructure, the effects of high temperatures on EV performance, and the need for improvements in the regulatory framework.
One of the biggest challenges is that EV adoption may not be sufficient to decrease overall carbon emissions. While EVs have a smaller carbon footprint compared to internal combustion engine-run vehicles, charging stations will need to be powered by clean energy sources to meaningfully lower emissions.
“Just fueling your electric vehicle with coal power or gas power won’t really make such a huge difference,” Seitz notes. “We should push more for renewable resources to make the mobility green, including renewables and nuclear power.”
Another challenge is a fear regarding the availability of charging points during long trips commonly referred to as “range anxiety” by automotive analysts. “Governments need to make sure that they get the right locations with the right equipment, to make sure that electric car drivers can charge along their route,” says Seitz.
Despite substantial investments in renewable energy projects aimed at achieving carbon neutrality by 2050, the UAE had only about 2,000 public charging points installed by 2023, with over 65 percent categorized as slow chargers. “The UAE doesn’t have much fast charging availability. What we currently have requires three to six hours of time. Fast charging batteries need to be installed,” Ali says.
Another challenge for the region is its high temperatures. A 2019 study by the American Automobile Association indicated that EVs could experience a reduction of up to 17 percent in driving range when temperatures exceed 35ºC.
“Saudis typically drive more than 50,000 km per year, meaning they might need to replace the battery in four to five years, which is a significant concern,” says Al-Bawaliz.
And while the total cost of owning an EV is now comparable to owning an internal combustion engine vehicle, Seitz points out that the initial purchase price and insurance rates for EVs are still relatively high.
Another challenge for the sector is the dearth of skilled labor specialized in sustainable energy projects in the region. The current workforce in the energy sector lacks the necessary skills and knowledge to effectively implement sustainable energy projects within the renewable energy field. To bridge these gaps, governments might need to re-evaluate their employment systems, insurance schemes, as well as migration policies to attract green workers.
While these challenges remain, the e-mobility sector continues to gain traction and attract investor interest in the GCC. This, combined with supportive government policies, rising commercial interest, and the increasing number of startups in the field, could allow EV adoption to make a significant contribution to achieving net zero targets by 2050.
This article first appeared in the October issue of Inc. Arabia magazine. To read the full issue online, click here.
