The UAE Cabinet has approved the first preliminary national licence for self-driving cars, granting it to Chinese company WeRide, as part of efforts to transform the country's transport sector and move towards a future economy.
WeRide will begin testing all types of autonomous vehicles on UAE roads.
"This is the first national-level autonomous driving licence in the Middle East and even globally," WeRide said in a statement.
"WeRide has been actively expanding its autonomous driving products and services internationally, with the Middle East being one of its key focus areas," it said.
Before receiving the licence, WeRide's Robotaxi had already completed public testing and operations on roads in the UAE for over a year.
The move "paves the way for transformative advancements in transportation" and will support the country's ambitions to be a "global leader in smart mobility solutions", said Daniel MacGregor, chief growth officer at Serco Middle East, a public services provider.
"It marks a significant step forward for the UAE in the field of autonomous vehicles, and we commend the government's forward-thinking approach in embracing innovation, and creating an environment conducive to the deployment of self-driving vehicles," he said.
"By fostering an ecosystem that encourages research, development, and adoption of autonomous technologies, the UAE is positioning itself at the forefront of the mobility revolution."
The latest move comes after Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, issued a law in April to govern the use of self-driving cars in Dubai.
The law outlines how Dubai's Roads and Transport Authority will regulate the use of driverless vehicles in the emirate, including the issuing of licences and transfer of ownership.
The RTA will develop plans and policies to improve the operation of self-driving cars in Dubai, identify the various categories of autonomous vehicles, and set their technical, operational and safety benchmarks.
It also says that operators are responsible for covering all damages caused by accidents.
Dubai aims to have 25 per cent of its transportation achieve fully autonomous operations by 2030.
The value of the global autonomous vehicle market is forecast to top $1.8 trillion by 2030, from about $94.4 billion in 2021, growing at a compound annual rate of almost 39 per cent, the latest data from Precedence Research shows.
This is close to an earlier estimate from analysts at Swiss bank UBS, that the market could be worth about $2 trillion a year by 2030.
Globally, by 2035, autonomous driving could create $300 billion to $400 billion in revenue, McKinsey said in a report earlier this year.
"Consumers benefit from using autonomous driving systems in many ways, including greater levels of safety; ease of operation for parking, merging and other manoeuvres; additional fuel savings because of the autonomous system’s ability to maintain optimal speeds; and more quality time," the report said.
However, support from regulators is essential to overcome autonomous driving safety concerns, creating a trusted and safe ecosystem, and implementing global standards, it added.
"Adoption of autonomous mobility is expected to generate significant value on multiple fronts. On the economic front, it is projected to boost overall productivity by up to 20 per cent where people are no longer required to spend 'unproductive time' behind the steering wheel," said Joseph Salem, head of travel and transportation, Middle East, at consultancy Arthur D Little.
"On the social front, a properly functioning autonomous mobility ecosystem will reduce accidents by up to 50 per cent, where human-driving factor is marginalised. On the environmental front, autonomous mobility will pave the way towards full electrification of the sector hence elimination of transport-related emissions – in line with the UAE's net zero ambitions."
The UAE seeks to achieve net zero carbon emissions by 2050 and has announced several initiatives, including the adoption of sustainable mobility, to reach its target.
Regionally, along with the UAE, Saudi Arabia is also focusing heavily on integrating autonomous vehicles in its transport strategy.
Saudi Arabia aims for 15 per cent of its public transport vehicles to be autonomous by 2030, Omaimah Bamasag, deputy of transport enablement at the Transport General Authority, said in Arthur D Little's Autonomous Mobility Journal in March.
“The kingdom’s goals for AV transport are very ambitious and can be seen from the giant projects based on autonomy,” Ms Bamasag said.
“These smart cities are designed to be sustainable through the introduction of new transport systems for passengers and goods based entirely on autonomous mobility.”
WeRide has also signed a preliminary agreement with entities in the kingdom to jointly promote autonomous driving vehicles in Saudi Arabia.
"This groundbreaking development [autonomous vehicles] signifies the future of transportation," Mr MacGregor said.
Partnerships and collaboration are key to unlocking the full potential of autonomous vehicles, he added.
"Governments in the region are required to work closely with the private sector to address all critical components towards autonomous mobility commercialisation," Mr Salem said.
"The critical components are regulations, physical infrastructure, digital infrastructure, vehicles technology, public acceptance."