By economic expert Ibrahim Nawar
The limited size of local and regional markets remains a major obstacle to producing a domestic electric car in any Arab country. The idea of Saudi Arabia becoming a major hub for exporting electric vehicles (EVs) to Arab nations is narrow in scope, given that the EV market in the Arab world is still very small—less than $1 billion, compared with $319 billion in China. The regional market only absorbs a few hundred cars annually, whereas new EV sales in China are expected to reach around 11.5 million vehicles this year.
On the global competition front, Chinese-made EVs accounted for about 69% of total global sales in the last month of last year. BYD surpassed Tesla, and while companies like Mercedes and BMW remain in the back of the competition, the ambition to produce a Saudi or locally-made car in any Arab country is largely impractical.
Interestingly, most Arab industrial policies focus on achieving the dream of producing a “national electric car,” while leading industrial nations such as Japan, Germany, the United States, and the United Kingdom have abandoned this notion. These countries understand the importance of global production and supply chains and focus on strengthening integration and cooperation between domestic and international production networks across continents.
If Saudi Arabia truly aims to benefit itself and its industrially ambitious neighbors, it should encourage the development of supporting industries and local and regional supply chains tied to the EV sector in the Arab world.
The only Arab country that avoided the “national car” trap is Morocco, which last year achieved $8.7 billion in automotive component exports and successfully attracted $9.5 billion in foreign investment, mostly concentrated in electric battery production and its components, with the largest shares coming from China and Europe.
This demonstrates a pragmatic path for Arab nations seeking industrial growth: focus on supply chains and integration rather than chasing the dream of a fully domestic EV.
