Saudi Arabia and South Korea: The New Power Couple
A Collaborative Car Factory for a Diverse Economy
In a bid to further diversify its economy and reduce reliance on oil, Saudi Arabia has entered into an agreement with Hyundai to construct a car factory.
- The proposed plant is likely to be located near Jeddah and is set to cover an extensive area of around 300,000 square meters.
- With an annual production capacity of 50,000 vehicles, the plant will cater to both EVs and traditional internal combustion engine cars.
- PIF will assume a significant 70% stake in the venture, while Hyundai will hold the remaining 30%.
Saudi Arabia is partnering with Hyundai to establish a state-of-the-art car factory worth over $500 million to further diversify its economy.
Announced on October 22nd at the Saudi Korean Business Forum, the car assembly plant will be in partnership with the Kingdom’s sovereign wealth fund, The Public Investment Fund (PIF). They will likely construct it at King Abdullah Economic City near Jeddah, spanning an area of approximately 300,000 square meters (3.2 million square feet). It will also have an annual production capacity of 50,000 vehicles. This includes both electric vehicles (EVs) and traditional internal combustion engine cars.
PIF will hold a substantial 70% stake while Hyundai will own the remaining 30%.
The project is expected to break ground in 2024 and commence vehicle production in 2026, aligning with Saudi Arabia’s ambitious goal of producing more than 300,000 vehicles annually by 2030.
Yazeed A. Al-Humied, Deputy Governor and Head of MENA Investments at PIF, expressed his enthusiasm about the venture, stating that “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.” The collaboration is anticipated to create thousands of jobs and facilitate the transfer of knowledge and expertise, further enhancing Saudi Arabia’s automotive and mobility sector.
Crown Prince Mohamad bin Salman has been working on diversifying the Kingdom’s economy as its heavy reliance on oil puts it in an awkward position. As such, this PIF investment into the EV industry is not the first. It has previously invested in the US-based EV startup Lucid Motors, encouraging them to establish their first international facility in Saudi Arabia
PIF has also launched its own electric vehicle brand, Ceer, and made significant international and domestic investments to secure the essential metals and minerals required for the automotive supply chain.
This agreement not only strengthens the economic ties between Hyundai and Saudi Arabia but also marks a historic moment as it will be the first South Korean automobile factory in the Middle East, further diversifying the kingdom’s economic landscape.
This collaboration promises to drive significant advancements in vehicle production, fostering a sustainable and eco-friendly automotive future in the region, all while opening doors to innovation and environmental progress.
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