Tesla, the world’s leading electric vehicle (EV) maker, is in early talks with Saudi Arabia to set up a manufacturing facility in the kingdom, according to a report by the Wall Street Journal. The move is part of Tesla’s ambitious plan to expand its production capacity and market share around the world, as well as Saudi Arabia’s effort to diversify its economy away from oil and secure metals needed for EVs.
Saudi Arabia offers incentives to Tesla
Saudi Arabia has been wooing Tesla with the right to purchase certain quantities of metals and minerals the company needs for its EVs from countries, including the Democratic Republic of Congo (DRC), the report said. The kingdom has been trying to secure assets in the DRC, which supplies around 70% of the world’s cobalt, a key ingredient for high-energy-density battery cells.
Cobalt is one of the most expensive and scarce metals used in EV batteries, and Tesla has been reducing its reliance on it in recent years. However, the company still needs some cobalt for its premium models, such as the Model S and Model X, and for its future battery innovations. Saudi Arabia’s offer could help Tesla lower its production costs and ensure a stable supply of the mineral.
Saudi Arabia is also interested in partnering with Tesla for other reasons. The kingdom is the majority investor in Lucid Group, one of the EV startups looking to challenge Tesla’s dominance of the industry. Lucid has already announced plans to build a factory in Saudi Arabia by 2024. By working with Tesla, Saudi Arabia could gain more insights into the EV market and technology, as well as create more jobs and opportunities for its citizens.
Tesla aims to sell 20 million vehicles a year by 2030
Tesla has a goal to sell 20 million vehicles a year by 2030, up from around 1.3 million in 2022. To achieve this target, the company needs to increase its production capacity and expand its presence in different regions. Tesla currently has six factories around the world, and is building a seventh one in Mexico.
Tesla CEO Elon Musk said in May that the company would probably pick a location for a new factory by the end of 2023. He did not specify which countries or regions he was considering, but he hinted that India and Africa were potential markets. Saudi Arabia could be another option for Tesla, as it has a large population, a high demand for cars, and a supportive government.
However, the talks between Tesla and Saudi Arabia are at a very early stage and could fall apart, the report said. There are many challenges and uncertainties involved in setting up a factory in a new country, such as regulatory hurdles, political risks, cultural differences, and environmental concerns. Tesla also has a history of changing its plans and priorities frequently, depending on market conditions and customer feedback.
Tesla did not respond to requests for comment on the report, while Saudi Arabia’s sovereign fund, the Public Investment Fund (PIF), declined to comment.
