Tesla arrives in the Kingdom as EV market begins to stir

Tesla officially launched its operations in Riyadh on Thursday, 10 April, without the presence of its CEO, inaugurating a new chapter in a market it had kept at arm’s length for years. The US-based EV giant introduced the Cybertruck and Model Y to local enthusiasts at the Bujairi Terrace, marking the company’s entrance to the fourth Mena market after setting up shop in Jordan, Qatar, and the UAE.

Great potential: Our EV market remains relatively new, with some 2k EVs said to have been sold in the country last year — that is fewer EVs than Tesla sells in a single day globally, Telemetry VP Sam Abuelsamid told Reuters. Saudi aims for 30% of all vehicles in its capital to be electric by 2030, leading to the launch of the Electric Vehicle Infrastructure Company, charged with installing 5k chargers nationwide by 2030.

The competition: Tesla will be butting heads with Chinese EV manufacturers BYD and Zeekr, which already opened showrooms in Riyadh last year. “Tesla won’t be a pioneer in the market…so it will be a hard start,” S&P Global Mobility expert Tatiana Hristova told CNBC, predicting Tesla sales will stand somewhere between 10k to 15k units in the next two years.

Tesla will also be going up against PIF-backed Lucid Motors, which opened its first international manufacturing facility in King Abdullah Economic City, with plans to produce up to 155k EVs annually. Lucid became the first global automaker to bear the “Made in Saudi” badge in January, and exports its Saudi-made vehicles to other countries.

Tesla could still fill the gap: More than 40% of Saudis polled are considering purchasing an EV between 2024 and 2026, according to PwC’s eMobility Outlook. That, coupled with the low penetration of EVs in the local market, could signal the market has been holding out for a heavy hitter like Tesla, Hristova said.

Why now? Things are not looking good for Tesla on the homefront. The company’s struggle in the US market, where sales dropped 13% in 1Q 2025, highlights the need to expand internationally, according to S&P Global. The decline in domestic sales is attributed to rising competition, backlash against CEO Elon Musk’s political involvement, and delays in the redesigned Model Y. Tesla’s performance also lagged due to new import tariffs and manufacturing cost pressures.

Trouble is also brewing on the other side of the Atlantic, where Tesla saw sales drop by 49% in the first two months of 2025, Reuters reports, citing the European Automobile Manufacturers’ Association. The automaker is now focusing on growing its international presence to increase its global footprint, reduce risks, and tap a growing demand for EVs, taking advantage of a thaw in relations with the Kingdom after Donald Trump’s return to power.

REMEMBER- Tesla reportedly delayed its entrance into the Saudi market due to an unconfirmed spat between CEO Elon Musk and the Public Investment Fund (PIF) over a frustrated 2018 PIF buyout. Musk presented shareholders in 2018 with the option to sell at USD 420 or hold shares and go private, seemingly without an offer in hand.

ICYMI- Saudi is angling to become a global automotive industry hub: PIF has been actively investing in EV makers and the automotive value chain for some time as part of its diversification agenda, including investing multiple times in Lucid. The fund also launched its own EV maker Ceer in a JV with Taiwan’s Foxconn. In late 2023, PIF established a USD 550 mn JV with Italian tire manufacturer Pirelli to establish a Saudi plant with a production capacity of some 3.5 mn tires a year.

BUT- The sector is facing challenges: Summer temperatures often top 50°C in the Kingdom, raising concerns about battery performance, especially for drivers covering long distances between cities, Reuters reports, citing Al Futtaim Automotive Managing Director Carlos Montenegro. He noted that many customers still prefer hybrids due to range anxiety and limited charging options.

ALSO- Is Tesla eying more than EVs? Speculation is also swirling about plans of Musk’s The Boring Company to build an underground road system, a project that offers Riyadh an innovative solution to traffic jams for a rapidly growing city, the Gulf News reports, citing a Sabq article. However, neither Riyadh officials nor The Boring Company confirmed the news.

The story got ink in Al Arabiya.