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Arab countries are striving to compete globally in the electric vehicles market by investing in domestic production and promoting the use of electric cars. Yet, the industry has not seen the same rate of development in the Arab world as in Western nations.
This article was translated from Arabic.
Several Arab countries are exerting efforts to keep up with the global expansion of the electric vehicle market by investing in domestic production and implementing strategies to promote the use of electric vehicles among their citizens.
The primary objective of these initiatives is not only to reduce carbon emissions but also to compete for a share of the profits in this thriving sector, transition to a productive economy, create job opportunities, and establish robust industrial supply chains.
The industry’s scope goes beyond the creation of vehicles to encompass related tasks like upkeep, the production of replacement components, and the creation of charging infrastructure.
The electric car sector in the Arab region has received significant support from several countries, including Egypt, the United Arab Emirates, the Kingdom of Saudi Arabia, Morocco, Qatar, Kuwait, and the Sultanate of Oman.
Despite the efforts made by these countries, there are still numerous obstacles hindering the widespread adoption of electric cars by citizens, leading to significant challenges that impede the growth of the industry in the region. As a consequence, the Arab world has not seen the same rate of development in the electric vehicle industry as Western nations.
A global industrial revolution in the electric car sector
It is not an overstatement to claim that the electric car industry has undergone a remarkable industrial revolution in recent years. This can be observed in the advancements made in energy storage and consumption technologies, the significant investments poured into the sector, and the rapid increase in sales of electric vehicles worldwide.
According to Bloomberg data, the global sales volume for electric vehicles reached a staggering $388 billion in 2022, representing a remarkable 53 per cent increase from the previous year. This surge in sales has led to a cumulative sales volume of over $1 trillion for electric cars over the past decade.
These figures indicate that car companies that failed to develop plans for manufacturing electric vehicles missed out on the opportunity to compete for a significant share of the market. This realization prompted industrialized countries to prioritize the importance of supporting this industry. It’s worth noting that electric car sales accounted for around 10 per cent of total global car sales in 2022, compared to only 5 per cent in 2021, highlighting the growing market share of electric vehicles as compared to traditional combustion engines.
The rapid increase in electric vehicle sales in recent years can be attributed, in part, to advancements in energy storage and usage technologies. These developments have enabled the industry to weather the economic slowdown and impacts of the COVID-19 pandemic. One notable innovation in this area is the establishment of safety standards for lithium batteries, which are now able to withstand temperatures exceeding 140 degrees Fahrenheit (60 degrees Celsius). This reduces the risk of rapid combustion or explosions when exposed to high temperatures.
For several years now, the United States, Japan, and China have been competing to support research aimed at enhancing the efficiency of electric car batteries. This has resulted in reduced recharge times and increased energy storage capacity.
Moreover, electric car manufacturers’ research has contributed to reducing energy consumption during travel, resulting in greater efficiency and making the new electric cars more attractive to consumers than older models. These advancements have made electric cars more capable of meeting the needs of consumers while reducing their carbon footprint.
The outbreak of the conflict in Ukraine and the ensuing risk to energy supply chains heightened Western countries’ concerns regarding energy security. As a consequence, these governments started offering financial support programs for the development of the electric vehicle market. Electric cars can be charged using renewable and clean energy, thereby reducing dependence on imported fossil fuels. For instance, the U.S. tax cut law granted American citizens a tax exemption of up to $6,500 for purchasing an electric car as part of their support package.
Arab countries’ efforts to invest in the electric car sector
Numerous Arab countries are striving to compete in the electric car industry, with some aiming to manufacture electric cars, while others focus on creating supportive infrastructure. For instance, the Kingdom of Saudi Arabia launched a collaborative project between the Saudi Investment Fund and Foxconn to manufacture its first electric car by 2025 in King Abdullah Economic City.
The objective of the project is to create a local brand and establish supply chains capable of securing the product at competitive prices compared to imported cars. The project aligns with Saudi Arabia’s Vision 2030, which seeks to transition to a productive economy instead of relying solely on oil for economic growth.
In addition, the Kingdom aims to increase the percentage of electric cars to 30 per cent of the total cars in the capital Riyadh. This initiative is part of the Kingdom’s commitment to eliminating greenhouse gas emissions within Saudi Arabia by 2060.
The United Arab Emirates has taken a significant step in the electric car industry with the establishment of the first electric car manufacturing factory in 2022 by “M Glory Holding” in Dubai Industrial City, a member of the TECOM Group. The factory is expected to produce around 10,000 cars annually, with parts imported from abroad. The government of Dubai plans to expand the production capacity of the factory to manufacture up to 55,000 cars annually by 2050. This project is part of a larger package of 50 industrial projects supported by the state, aimed at boosting the productivity of the UAE economy.
In addition, the Masdar City project in the emirate of Abu Dhabi stands out as the world’s first city to rely completely on clean and renewable energy. The city features the Middle East’s first fast-charging station for electric cars, which can charge batteries up to 80 per cent in just 30 minutes. It also boasts an integrated system for shared transportation using electric vehicles, as well as an advanced system for personal rapid transportation using small computer-guided electric cabins.
To encourage the public to shift to electric cars, the UAE has established a comprehensive infrastructure of charging stations. Over the past two years, more than 30 stations were constructed in Abu Dhabi, 25 in Dubai, and 10 in Sharjah. The UAE government also introduced a dedicated credit card that automatically charges the user’s account for the cost of charging their car.
Other Gulf countries are also competing for a share of the profits in this sector. Qatar has signed agreements with French and Japanese firms to establish local factories that can assemble electric cars. Last year, Omani investment company MAYS, which is part of the Omani Technology Fund, unveiled the first model of its electric cars, with plans to initially launch 100 vehicles to test the market.
In Kuwait, the government is planning to establish an integrated industrial city dedicated to serving electric vehicle manufacturers. According to the Kuwaiti Ports Corporation, which is supervising the project, it is expected to attract major car manufacturers to Kuwait. In order to facilitate the transition to electric cars, Kuwait has set its sights on establishing a robust system for electric car charging services, including determining the locations of charging stations and the safety and security standards.
Egypt, on the other hand, has only recently entered this race, announcing in February 2023 the models of its first locally manufactured electric cars, which are expected to hit the market within six months. Meanwhile, Morocco joined the race in September 2022, with the announcement of the first electric car produced by French company Renault at its Tangiers factory, north of the country.
Despite significant investments and official support from Arab governments, it is clear that the expansion of electric car sales in Arab markets is not yet experiencing the same level of growth as witnessed in Western economies.
One significant challenge is the reluctance and fear of most insurance companies in the Arab region to set up special programs that cover electric cars. This is mainly due to the novelty of this type of vehicle and a lack of knowledge about the risks associated with electric cars, the cost of spare parts, and the type of breakdowns that can result from accidents.
Another challenge is the high cost of electric cars compared to conventional cars, especially in countries experiencing economic crises with limited purchasing power, like Egypt. High inflation rates during the years 2022 and 2023 have only exacerbated this issue. Moreover, it is challenging to provide sufficient financial support for this sector due to the Egyptian government’s stringent austerity policies during the current crisis. These variables may render electric vehicles less popular and less widely used in the area.
The most significant challenge faced by all Arab countries, however, is the limited availability of charging stations despite the efforts made to expand the infrastructure network. This issue will impact consumer decisions in countries with vast open spaces, where citizens are accustomed to traveling long distances in their cars, such as Saudi Arabia and Oman. It’s worth noting that the current average distance that can be covered after charging an electric car battery once is about 349 km.
Furthermore, low fuel prices in Gulf countries, especially oil-producing nations like Saudi Arabia and Kuwait, make electric cars less competitive compared to fossil fuel-powered vehicles. In countries where gasoline prices are subsidized at a certain level, such as Egypt, this factor will also help maintain the competitiveness of conventional cars.
Likewise, is undeniable that many Arab nations, such as Lebanon, Tunisia, Syria, Sudan, and Yemen, are still a long way from welcoming the switch to electric vehicles. Due to economic, security, or political issues, the respective governments of these countries are unable to support the industry or provide the necessary infrastructure for its development.
Moreover, electricity supply issues in some of these nations will inevitably hinder the possibility of providing sustainable power to charging stations, thereby affecting the electric car service.
Currently, focusing on implementing them in high fuel-consuming areas, such as public transportation, commercial shipping, and school buses, is the most efficient way for Arab governments to support the switch to electric transportation.
By doing this, they would lower the cost of fuel and steadily raise the demand for electric transportation services, making it easier to expand the needed infrastructure. Additionally, enacting taxes on the use of fossil fuels while also extending the infrastructure for charging electric vehicles, may further incentivize the use of electric vehicles.