By Pesha Magid and Manya Saini
RIYADH/DUBAI (Reuters) – Tesla starts selling cars in Saudi Arabia on Thursday, a country where on a 900-kilometre (559 mile) stretch of its main east-west highway linking the capital Riyadh and the holy city of Mecca there isn’t a single charging station.
Electric vehicle sales in the kingdom totalled just 2,000 last year, according to Telemetry analyst Sam Abuelsamid, fewer than Tesla sold between breakfast and dinner on an average day.
But Saudi Arabia has huge plans for EVs that Tesla has not been able to tap, partly because of a feud between its billionaire CEO Elon Musk and the kingdom’s powerful Public Investment Fund sovereign wealth fund that dates back to 2018.
A new political landscape has given Musk an opportunity to change that.
Relations between Riyadh and Musk have improved since he took a high-profile role in U.S. President Donald Trump’s election campaign and then a top position in his administration, slashing the federal bureaucracy.
In a coup for Riyadh, Trump is set to visit Saudi Arabia in the coming weeks in his first foreign trip, after asking the kingdom in January to spend upwards of $1 trillion in the U.S. economy over four years, including military purchases.
“Plenty of business people are thinking about how to position their firms around President Trump’s anticipated visit to the Gulf,” said Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington.
“I suspect Tesla wants to firmly plant their flag in the Saudi market before President Trump’s visit and then try to capitalise on momentum thereafter.”
MISSING OUT
Musk could do with a boost.
Tesla posted a 13% drop in first-quarter sales earlier this month, its weakest performance in nearly three years, driven by a backlash against Musk’s politics, rising competition, and delays for a Model Y refresh.
But Musk has work to do in Saudi Arabia after his public spat with PIF boss Yasir al-Rumayyan.
The dispute started when Musk tweeted in 2018 he had “funding secured” to take Tesla private after a meeting with the PIF. In the ensuing lawsuit filed by investors when a bid failed to materialise, tense text messages between Musk and al-Rumayyan were made public.
In the following years, Musk missed out on the billions Riyadh has poured into its Vision 2030 programme to diversify the economy away from oil. The kingdom is investing an estimated $39 billion in developing the EV sector, according to a 2024 report by consultants PwC.
Tesla’s Saudi debut also lags that of Chinese giant BYD, which opened its Riyadh showroom in May 2024.
CHALLENGES
Now Tesla has arrived in Saudi Arabia, it faces a number of challenges – even if one of them is unlikely to be the angry protests against Musk’s politics that have recently dogged its operations in Europe and the United States.
These include the paucity of charging stations and summer temperatures that can top 50 degrees Celsius (122 degrees Fahrenheit), draining EV batteries more rapidly.
As of 2024, Saudi Arabia had just 101 EV charging stations, compared with 261 in neighbouring United Arab Emirates, a country with a third the population, data from Statista based on Electromaps showed.
Most are in major cities, making long journeys across desert highways unfeasible.
“I think charging is probably one of the main, if not the main, point of concern,” said Carlos Montenegro, BYD’s general manager in Saudi Arabia, adding Saudi drivers clock up many more kilometres each year than in other markets.
Around 70% of the cars BYD sells in Saudi Arabia are hybrids rather than pure EVs, Montenegro said.
Fahd Abdulrahman, a Saudi browsing at BYD’s Riyadh showroom, said driving range was his major concern about buying an EV.
“I drive a lot, my average is more than 50,000 km (per year). I am afraid that an EV would not serve for that.”
Yet Riyadh has massive development plans, which include a goal of 30% EV adoption by 2030.
It has formed the Electric Vehicle Infrastructure Company, which aims to boost the number of chargers to 5,000 by 2030, 50 times the current number.
“EV adoption (in Saudi Arabia) will likely remain below leading countries, such as China, but could still see growth in the coming years,” said Seth Goldstein, equity strategist at Morningstar. “I see growing EV demand as more fast chargers are built and affordable long-range EVs enter the market.”
(Reporting by Pesha Magid in Riyadh and Manya Saini in Dubai. Editing by Andrew Mills and Mark Potter)
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