Tesla Set to Launch Electric Vehicle Sales in Saudi Arabia Following Dispute Reconciliation
Riyadh, Saudi Arabia – Electric vehicle (EV) manufacturer Tesla has announced it will commence sales in Saudi Arabia starting next month, according to a statement on its website. This move signals a déente between CEO Elon Musk and the kingdom, potentially resolving a past disagreement stemming from Musk’s brief attempt to take the company private in 2018. The launch marks Tesla’s entry into Saudi Arabia, a significant market in the Gulf region where it previously lacked a presence, despite operating in other Middle Eastern nations. This expansion into Saudi Arabia spotlights the growing global demand for electric vehicles and Tesla’s strategic market penetration.
Background of the Tesla-Saudi Arabia Relationship
The friction between Tesla and Saudi Arabia originated from a 2018 tweet by Musk asserting he had secured funding to take Tesla private, purportedly after discussions with Saudi Arabia’s Public Investment Fund (PIF), the sovereign wealth fund of the kingdom.
This tweet triggered investor lawsuits when the privatization deal failed to materialize. During the legal proceedings, communications, including tense text messages between Musk and Yasir al-Rumayyan, head of the PIF, came to light.
Relations began to thaw last autumn, coinciding with Musk’s increased involvement in political discussions and interactions with the previous and current US administrations.
Recent reports indicate that a high-level US official may make Saudi Arabia their first overseas visit, following requests for the kingdom to invest significantly in the US economy through various sectors, potentially including substantial military acquisitions planned over the coming years.
Tesla Launch Event and Product Showcase
Tesla’s inaugural launch event in Riyadh, scheduled for April 10, will feature its range of EVs and products powered by solar energy, as stated in an online announcement.
The company elaborated, “Experience the future of autonomous driving with Cybercab, and meet Optimus, our humanoid robot, as we showcase the advancements in AI and robotics.”
Furthermore, Tesla announced the opening of temporary stores across Riyadh, Jeddah, and Dammam starting April 11. A subsequent statement indicated that more details regarding Tesla’s Saudi Arabian strategy will be disclosed in the upcoming weeks, with substantial investment plans extending into 2025 and beyond.
Invitations for the launch event included options for attendees to specify their interest in particular Tesla vehicle models.
Challenges and Opportunities in the Saudi EV Market
This launch occurs as Tesla faces a decrease in EV sales in European markets, reportedly influenced by public reactions to Musk’s political stances. The brand has also experienced protests in the United States related to his leadership in government efficiency initiatives that resulted in significant job reductions and program cancellations.
Electric vehicle adoption in Saudi Arabia has been gradual. A 2024 study by PwC estimated that EVs constitute only 1% of total vehicle sales in the country.
Despite Tesla’s late entry, other EV brands, including Chinese automotive giant BYD and Lucid, which is supported by PIF investment, already have a market presence in Saudi Arabia.
Significantly, following the public dispute with Musk, the PIF announced a substantial investment exceeding $1 billion in Lucid, becoming the primary investor in one of Tesla’s emerging EV competitors.
The PIF’s portfolio also includes investment in Ceer, the aforementioned Saudi domestic EV brand preparing for market introduction.
Nevertheless, large, gasoline-powered vehicles remain prevalent on Saudi roads, where fuel is inexpensive. The limited availability of EV charging infrastructure poses a challenge, potentially hindering long-distance travel across the country’s extensive desert regions for EV owners.
Improved Relations Between Tesla and Saudi Arabia
One of the initial indications of improving relations was the public appearance of Musk alongside Rumayyan and a US political figure at a mixed martial arts event in New York in November.
Prior to this, Musk made an unannounced video appearance at Riyadh’s Future Investment Initiative summit.
In 2023, a US court determined that Musk was not responsible for misleading investors with his tweet concerning secured funding for taking Tesla private.
Musk testified that the PIF was interested in privatizing Tesla at the time of his tweet. During the court proceedings, exchanges of tense text messages between Musk and Rumayyan were presented as evidence.
According to court documents, Musk texted Rumayyan, stating, “You are throwing me under the bus.”
Recent data revealed that Tesla’s European sales have decreased by 42.6% year-to-date, despite overall growth in EV demand.
In the United States, activist groups have organized “Tesla Takedown” demonstrations protesting Musk’s involvement in governmental efficiency initiatives, which have led to significant workforce reductions, suspension of international aid, and termination of numerous government programs and contracts.