Saudi Arabia's wealth fund and Hyundai agreed to jointly build a car manufacturing plant in the kingdom, with an estimated investment of more than $500 million, as part of the country's push to develop its automotive industry.
The project will be a joint venture between the Public Investment Fund (PIF), which will hold a 70 per cent stake, and South Korea's Hyundai, which will own the remainder, the fund said in a statement on Sunday.
The joint venture intends to manufacture 50,000 vehicles a year, including internal combustion engine and electric powered vehicles.
The plant is scheduled to begin production in 2026, after breaking ground in 2024.
The partnership will help the PIF in accelerating the growth of Saudi Arabia’s automotive industry – “one of our 13 priority sectors”, Yazeed Al-Humied, deputy governor and head of Middle East and North Africa investments at the fund, said.
“Our investment in vehicle manufacturing with Hyundai Motor Company is a milestone, aligning closely with our stakes in Lucid and Ceer Motors, and amplifying the breadth of Saudi Arabia's automotive and mobility value chain.”
Saudi Arabia, the Arab world's largest economy, is focused on building its domestic EV market as part of its Vision 2030 strategy to diversify its economy away from oil.
In addition, the PIF launched a company to boost EV manufacturing in the kingdom and develop local supply chain capabilities for the automotive industry.
The new company – National Automotive and Mobility Investment Company, or Tasaru Mobility Investments – aims to drive strategic investment and partnerships with local and global private companies.
In September, PIF-backed luxury electric vehicle maker Lucid Group said it opened its first international manufacturing plant in Saudi Arabia, which is expected to produce 155,000 electric vehicles a year.
In November last year, the PIF also launched the kingdom's first electric vehicle brand, Ceer, which aims to attract more than $150 million in foreign direct investment and create up to 30,000 direct and indirect jobs.
The PIF's new manufacturing plant with Hyundai will “create thousands of jobs and allow for knowledge and expertise transfer”, the fund said.
The localisation of Hyundai’s cars will accelerate the development of Saudi Arabia’s automotive and mobility industry and attract further investments to the sector and the wider economy, the PIF said.
Hyundai, the world's third biggest car maker, will providing technical and commercial assistance at the plant.
The joint venture has the potential “to drive significant advancements in vehicle production, fostering a sustainable and eco-friendly automotive future in the region”, Jaehoon Chang, president and chief executive of Hyundai, said.
“Our joint efforts will create opportunities for innovation and environmental progress.”
Completing the joint venture agreement is subject to getting the required approvals from the relevant authorities and meeting all conditions, the PIF said.