Electric cars in the Arab world: opportunities and challenges

The world is witnessing an increasing trend towards electric vehicles (EVs), and this trend is gaining particular importance in the Arab world. Adopting this technology is an important step towards sustainable development and reducing dependence on oil.

The current situation of electric cars in the Arab world

In several Arab nations, governments are increasingly adopting policies that promote the adoption of electric vehicles (EVs). These policies include establishing charging infrastructure and offering consumer incentives. To illustrate this trend, let’s examine the current situation regarding electric vehicles in three specific countries: Egypt, the United Arab Emirates (UAE), and Saudi Arabia (KSA).

Electric cars in Egypt

The current situation of electric vehicles (EVs) in Egypt is marked by several promising developments and initiatives aimed at transitioning the country’s transportation sector towards electrification.

As of late 2023, Egypt has been making significant strides in establishing its e-mobility infrastructure. The government has licensed a local electric car factory, EgyptSat Auto, which is expected to start production by the end of 2024. This factory is set to produce electric passenger cars, buses, motorcycles, and charging stations. Additionally, the factory, with an investment of EGP 300 million, will be located in the 10th of Ramadan city and is expected to create around 500 jobs​​.

Moreover, Egypt is accelerating its transport transition with large-scale vehicle conversions. More than 100,000 internal combustion vehicles are planned to be converted to electric drives. This initiative is being led by two national electric mobility companies, Shift EV and BluEV, both based in Cairo. Shift EV aims to convert 100,000 combustion vehicles, including pickups and minivans, while BluEV focuses on converting two- and three-wheelers and offers battery leasing and a network of battery swap stations​​.

In addition, Egypt was ranked 28th in the Global Electric Mobility Readiness Index (GEMRIX) 2023, which assesses the readiness of countries to transition to electric vehicles. The country scored 32 points out of 100, indicating it is a starter market with strong potential for new entrants and early infrastructure development.

The Egyptian government has been showing strong ambitions to promote EVs as part of its commitment to achieving sustainable development goals, especially outlined in Egypt Vision 2030. This vision includes a ban on traditional petrol and diesel cars by 2040 and aims for a 10 percent reduction of greenhouse emissions from the energy sector by 2030. The government has also established a new regulatory authority for the local automotive industry and plans to increase green investments to 50 percent of the country’s total investments by FY 2024/2025​​.

These developments demonstrate Egypt’s commitment to reducing its carbon footprint and embracing sustainable transportation solutions. The country is actively working towards building a robust e-mobility ecosystem, which includes local manufacturing of electric vehicles, infrastructure development, and supportive government policies.

Electric cars in United Arab Emirates

The current situation of electric vehicles (EVs) in the UAE reflects a rapidly growing market and a strong commitment from the government to promote the use of EVs as part of its efforts to achieve zero carbon emissions by 2050.

As of 2023, EV sales in the UAE have been increasing rapidly, with EVs constituting over 1% of the overall car market. This growth is supported by the introduction of new models from various global manufacturers, enhancing the options available to consumers. The UAE has set a goal of having 42,000 EVs on its roads by 2030 and is actively converting government agency cars to EVs.

To support this growth, there has been a significant increase in the number of charging stations across the country. The Dubai Electricity and Water Authority (DEWA) alone aims to have 1,000 public charging stations in Dubai by 2025, up from 620 at the end of 2022. This expansion is part of the UAE’s broader Net Zero 2050 Strategic Initiative, which involves investing in clean and renewable energy sources.

The UAE’s National Electric Vehicles Policy is fostering collaboration with federal, local, and private sector partners to establish a national network of EV chargers. The policy seeks to reduce energy consumption in the transport sector, streamline the EV charging process, and maintain high road quality. A new regulatory authority has also been established to oversee the local automotive industry.

This policy is part of a larger effort to increase the share of EVs to 50% of total vehicles on UAE roads by 2050. In Dubai, the government has mandated that 30% of public sector vehicles and 10% of all vehicle sales be electric or hybrid by 2030, supporting the Dubai Green Mobility Strategy 2030. Moreover, Dubai Roads and Transport Authority (RTA) has successfully converted 50% of its taxi fleet to hybrid vehicles and intends to make the entire fleet hybrid or electric by 2027.

The UAE’s efforts in promoting EV adoption are also reflected in its high ranking in the Global Electric Mobility Readiness Index (GEMRIX) 2023, where it was placed 7th globally and 1st in the region. The index indicates the UAE’s strong commitment to sustainable transportation and its aim to become carbon neutral by 2050. A significant proportion of UAE residents, around 82%, have expressed their willingness to purchase an EV as their next vehicle, demonstrating growing consumer acceptance of EVs in the country.

Electric cars in Saudi Arabia

The electric vehicle (EV) industry in Saudi Arabia is experiencing significant growth and development, aligning with the country’s efforts to diversify its economy and reduce oil dependency. Key initiatives and developments include:

Government Initiatives and Support: Saudi Arabia has launched the Saudi Green Initiative and the Middle East Green Initiative, aiming to combat climate change and promote environmental sustainability. These initiatives are focused on increasing the share of EVs in the country’s vehicle fleet.

Manufacturing Developments:

• Lucid Motors: Saudi Arabia’s Public Investment Fund (PIF) holds a 63% stake in Lucid Motors. Lucid Motors plans to establish a manufacturing facility in the Kingdom, initially for re-assembling vehicles and later for full-scale production, with a projected annual production capacity of 155,000 vehicles.
• Hyundai: An MoU was signed with Hyundai Motor Company to enhance vehicle manufacturing in Saudi Arabia, including plans for a local assembly plant for electric and internal combustion engine cars.
• Canoo and Avass Group: Canoo has partnered with GCC Olayan for vehicle sale, distribution, and service, and Avass Group has signed an agreement to manufacture lithium batteries and electric buses within Saudi Arabia.

Charging Infrastructure: A new EV infrastructure company aims to establish more than 5,000 fast chargers across the kingdom by 2030, with a presence in over 1,000 locations.

Future Prospects and Industry Growth: The establishment of the National Automotive and Mobility Investment Company (Tasaru Mobility Investments) by PIF is intended to drive strategic investment and partnerships, localize manufacturing, and support the development of the kingdom’s EV and autonomous mobility ecosystem.

Economic and Environmental Goals: These developments are part of Saudi Arabia’s Vision 2030 strategy to diversify the economy away from oil and achieve net-zero carbon emissions by 2060. The EV industry’s growth is also expected to contribute significantly to the economy and job creation.

Saudi Arabia’s approach towards EVs is part of a broader strategy to transition to sustainable transport and develop its local manufacturing sector, aligning with global trends and environmental commitments.

These examples from Egypt, UAE, and KSA demonstrate a regional shift towards electric vehicles, supported by government policies, investment in charging infrastructure, and incentives for consumers, aligning with global environmental goals and the pursuit of energy diversification. Other Gulf Cooperation Council (GCC) Countries like Bahrain, Kuwait, and Oman are making progress in e-mobility, as indicated in the Global Electric Mobility Readiness Index. They are actively working on government initiatives and public-private partnerships to enhance EV adoption.

Challenges facing the adoption of electric cars in the Arab world

The adoption of Electric cars in the Arab world is met with several challenges, despite the growing interest and government initiatives to promote their use. Some of the key challenges include:

1. Cost of Electric Vehicles: One of the main barriers is the high cost of electric vehicles compared to conventional vehicles. This is particularly pertinent in regions experiencing economic crises or those with limited purchasing power. High inflation rates and stringent austerity policies can make EVs less attractive to consumers.
2. Charging Infrastructure: Another significant challenge is the limited availability of charging stations. This is especially problematic in countries with vast territories where people are used to traveling long distances, such as Saudi Arabia and Oman. The current infrastructure may not be sufficient to support widespread use of EVs, which affects consumer decisions.
3. Insurance Coverage: There is a reluctance among insurance companies in the region to set up special programs that cover electric cars. This hesitation is due to the novelty of EVs and a lack of knowledge about the risks associated, the cost of spare parts, and the types of breakdowns that can result from accidents.
4. Competitiveness with Conventional Cars: In countries with low fuel prices, especially oil-producing nations like Saudi Arabia and Kuwait, electric cars face stiff competition from fossil fuel-powered vehicles. In regions where gasoline prices are subsidized, this factor maintains the competitiveness of conventional cars.
5. Variety of EV Options: The EV market currently offers fewer options and manufacturers compared to the conventional vehicle market. This limitation can impact consumer purchase decisions, as they may wait for a broader range of choices before committing to an electric vehicle.
6. Infrastructure Readiness: The readiness of the existing infrastructure to support a growing number of EVs is also a concern. While roads may be suitable, the deployment of charging stations is crucial. Although the number of charging stations has improved, it is still insufficient to support a large number of EVs and alleviate “range anxiety” during long commutes.

Addressing these challenges is critical for the successful adoption of electric cars in the Arab world. Strategies like focusing on high fuel-consuming areas such as public transportation, implementing taxes on fossil fuels while expanding charging infrastructure, and offering incentives for EV adoption can help overcome these hurdles and pave the way for a sustainable transportation future in the region.