How the Middle East is getting ready for the post-oil, EV era of mobility

When BlackRock, the world's largest asset manager, announced the addition of the CEO of Saudi Aramco, the world's largest oil company, to its board of directors, some investors may have been surprised, considering BlackRock's prominent role in investing in a low-carbon future.

The Middle East, traditionally known for its oil and gas wealth, is now redirecting its investments towards a more sustainable future, potentially dominated by electric vehicles (EVs). Saudi Arabia is actively working on its electric vehicle brand, Ceer, and owns a significant stake of about 60% in luxury EV maker Lucid Motors, with recent additional investments totalling $1.8 billion from its public fund. The electric vehicle sector is experiencing significant growth in Israel, with deliveries in the first half of this year surpassing the same period last year by over 210%. In Bahrain, Gauss Auto, an American manufacturing corporation, collaborated with Bahraini company Marson Group to establish an electric vehicle manufacturing plant in the country. A recent initiative to embrace the EV future in the Middle East involves a partnership between the UAE and Einride, an autonomous electric trucking company based in Sweden. Einride, ranked 13th on CNBC's 2023 Disruptor 50 list, has entered into a memorandum of understanding with the UAE Ministry of Energy and Infrastructure to establish sustainable shipping within the region. The plan involves developing the Middle East's largest autonomous and electric fleet of trucks over the next five years, known as the Falcon Rise project. The project aims to deploy a freight mobility grid covering over 300 miles across Abu Dhabi, Dubai, and Sharjah, consisting of 2,000 electric trucks, 200 autonomous trucks, and eight charging stations. One challenge in nationwide electrification is the geographical makeup, influenced by a country's natural geography and size. The UAE's "contained country" structure makes it more feasible to fully electrify, facilitating Einride's ambitious project.

Similarly, the Saudi government is investing in infrastructure to support EV adoption. The Saudi Electric Vehicle Charging Infrastructure Development Initiative (SEVCIDI) has been working towards installing 50,000 domestic charging stations by 2025. Major U.S. and Chinese auto manufacturers are also vying for a share in the Middle East's EV market. GM plans to launch several EV models, including the Cadillac Lyriq, GMC Hummer EV, and Chevrolet Bolt EUV, while Ford aims to introduce EVs in the region by 2024. China is making its mark in the region through partnerships and investments. Saudi Arabia's Ministry of Investment recently signed a $5.6 billion deal with Human Horizons, a Chinese electric vehicle manufacturer, and the UAE holds a 7% stake in Nio, a Shanghai-based electric car company. Despite the global transition to electric vehicles, the demand for oil remains substantial, with OPEC projecting a rise to 110 million barrels a day in about 20 years. Sanctions have shifted energy flows but haven't curtailed the oil demand. While the EV transition is inevitable, the timing and required investments are substantial. Challenges include establishing new supply chains for batteries and upstream minerals and metals. Nonetheless, the Einride-UAE partnership and the overall enthusiasm for EVs could inspire other Middle Eastern countries to transition their infrastructure, combat climate change, and embrace the electric future.