Lucid Group, the car maker backed by Saudi Arabia's Public Investment Fund, will begin construction of its first international manufacturing centre in the kingdom during the first half of this year, as global demand for electric vehicles continues to soar.
US-listed Lucid has signed agreements with the Ministry of Investment of Saudi Arabia, the Saudi Industrial Development Fund and the Economic City at King Abdullah Economic City (Kaec) for the factory, it said on Tuesday.
At the Kaec plant's peak, the company expects to manufacture up to 150,000 vehicles per year.
"Establishing a global manufacturing footprint is a practical, natural step and enables us to grow our brand, scale our business, and address worldwide and untapped market demand on an entirely new level, while also taking action to address climate change through inspiring sustainable transportation,” said Peter Rawlinson, chief executive and chief technology officer of Lucid Group.
“Our strong relationships with the Public Investment Fund and our partners also gives us unique insight into the demand for luxury cars and SUVs in Saudi Arabia and beyond."
Global sales of electric vehicles more than doubled to 6.6 million in 2021, figures compiled by the International Energy Agency show. The worldwide EV market currently accounts for 9 per cent of the overall market share of the car industry, more than double the 4.1 per cent share in 2020, when three million units were sold and more than triple 2019's 2.5 per cent share.
In 2012, about 130,000 EVs were sold — today, that is roughly the number sold in a week, said the agency.
California-based Lucid, was founded in 2007, and currently manufactures its vehicles from its main factory in Arizona. In 2018, the PIF invested more than $1 billion in Lucid to acquire a substantial stake, helping it to accelerate its manufacturing plans. The company became the first EV start-up to go public through a special purpose acquisition company last July.
Lucid said it reviewed "multiple opportunities" before selecting Kaec in Saudi Arabia as the site for its first international manufacturing plant.
It expects to benefit from the availability of "competitively-priced commodities and energy and a newly emerging domestic supply chain, and a factory location that facilitates global logistics", the statement said.
The company also expects to be able to access financing to build and equip the manufacturing plant and to train automotive workers. Lucid expects to employ "several thousand people" — primarily Saudi citizens — at the factory once full production capacity is established.
The new plant, which will be fully owned by Lucid, will initially assemble Lucid Air vehicle “kits” that are manufactured at the company’s factory in Arizona. Over time, the car maker aims to produce complete vehicles at the Saudi plant.
Vehicles in the initial phase will be for the market in Saudi Arabia, but Lucid plans to export finished cars to other global markets, including exclusive models designed for "discerning customers in the region".
The car maker, which is also expanding operations at its Arizona manufacturing centre, expects that its production capacity in both plants will exceed 500,000 vehicles per year in aggregate when each factory reaches its target capacity.
Overall, Lucid estimates that its manufacturing centre in Saudi Arabia may add up to $3.4bn in value to the company over 15 years.
The plant is also expected to accelerate Saudi Arabia’s strategic goal to transform and diversify its economy through the development of sustainable energy and transportation.
“Today, we take a major step towards Saudi Arabia’s goal of diversifying its economy by creating a new manufacturing hub to spearhead the future of mobility for the Middle East region," said Khalid Al-Falih, Minister of Investment of Saudi Arabia.
"Attracting a global leader in electric vehicles such as Lucid to open its first international manufacturing plant in Saudi Arabia reflects our commitment to creating long-term economic value in a sustainable, enduring, and globally integrated way."
Growing and diversifying the industrial sector is a key part of the kingdom’s Vision 2030 strategy.
“We continue to build out our global competitiveness, relying on Saudi Arabia’s many qualitative advantages, starting with its proven human resources, its industrial capabilities and its quality digital and physical infrastructure, to its advantageous geographical location in the region," said Bandar Alkhorayef, Saudi Arabia’s Minister of Industry and Mineral Resources and chairman of SIDF.
