[MIDDLE EAST] The Tesla electric vehicle firm, founded by billionaire Elon Musk, opened its first showrooms in oil-rich Saudi Arabia, where hybrid automobiles are still uncommon. The launch of stores in Riyadh, Jeddah, and Damam comes as Tesla's global sales decline.
The move aligns with Saudi Arabia’s Vision 2030 economic diversification plan, which includes ambitious targets for electric vehicle adoption. The kingdom aims for 30% of cars in Riyadh to be electric by the end of the decade, signaling a gradual shift away from fossil fuel dependency despite its vast oil reserves.
Showrooms in the United States have been targeted, allegedly due to connections between Musk, the world's richest person, and US President Donald Trump. The company's stock price has fallen since Musk began engaging with the US government. "Today we are proud to officially launch in the kingdom," said Naseem Akbarzada, Tesla's national manager in Saudi Arabia, welcoming the beginning of a "long-term presence". He also stated that charging facilities for electric vehicles will be available beginning today in the three cities where the showrooms had been erected, with more to come.
Tesla’s entry into Saudi Arabia follows growing regional competition, with neighboring UAE and Bahrain already hosting multiple EV brands. Analysts suggest Tesla’s expansion could accelerate local infrastructure development, as the kingdom races to catch up with more mature EV markets in the Gulf.
Saudi Arabia is a crucial regional US ally, and Trump developed tight ties with Crown Prince Mohammed bin Salman during his first term, promising to spend US$600 billion in US trade and investments. Despite the fact that demand for electric vehicles in Saudi Arabia is limited, a large number of young Saudis came to look at Tesla cars. The world's greatest oil exporter has low fuel prices, with a litre of petrol costing only 2.33 riyals (US$0.62). Because of cheap fuel and long periods of high heat in the vast desert area, large oil-consuming vehicles reign supreme.
However, rising environmental awareness among younger Saudis and government incentives, such as reduced registration fees for EVs, could gradually shift consumer preferences. Industry experts note that Tesla’s brand appeal may attract early adopters, even if mass-market adoption remains years away.
Mohammed Al-Qahtani, a Saudi economist, hailed Tesla's gesture but asked Musk's company to do more. "We do not want a showroom; we want a factory," he stated. "We want to be part of the production process, not just consumption." Due to a lack of charging infrastructure and the country's enormous size, many Saudi drivers will see EVs as suited for shorter journeys rather than replacements for conventional vehicles. The capital is almost 950 kilometers away from the second city, Jeddah, which is further than most electric car batteries can travel.
According to statistics site Statista, Saudi Arabia had only 101 charge stations before to Tesla's arrival, compared to 261 in its much smaller neighbor, the UAE. Although the Saudi EV market remains small, it tripled last year to nearly 800 cars, according to business news outlet Al-Iqtisadiyah.
Tesla’s Supercharger network, known for its fast-charging capabilities, could help alleviate range anxiety among Saudi drivers. The company has yet to confirm expansion plans for its charging infrastructure beyond the initial stations, but industry watchers expect further announcements as demand grows.
Authorities want to diversify the economy, which is highly reliant on oil, and plan to add 5,000 electric vehicle chargers by 2030. Saudi Arabia's sovereign wealth fund, PIF, now owns 60% of premium electric vehicle maker Lucid. It has also signed an agreement with South Korean automaker Hyundai to build an electric and gasoline-powered automobile facility in the kingdom.
CEER, a Saudi EV brand that started in 2022, expects to begin production in 2025. A vehicle from Lucid, which will construct a factory in Jeddah in 2023 following a billion-dollar Saudi investment, costs $92,000. Last May, Chinese company BYD built a shop in Riyadh to sell more affordable electric vehicles.
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