How the King Salman cluster is accelerating Saudi Arabia's EV vision
The King Salman Automotive Cluster within King Abdullah Economic City, announced by Crown Prince Mohammed bin Salman in February, will serve as a key hub for the automotive sector, hosting headquarters and factories for both local and global companies.
Notable firms include Ceer, Saudi Arabia's first electric vehicle brand, and Lucid Motors, which opened its first international plant in KAEC in 2023.
The cluster will also feature Public Investment Fund joint projects with global manufacturers, such as Hyundai's automated car factory and a Pirelli joint venture to build a local tire plant.
It will boost Saudi Arabia's automotive industry by expanding manufacturing, advancing research and development, and streamlining supply chains for regional and global markets.
The cluster underscores Saudi Arabia's ambitions to lead in the global EV market, in line with the National Industrial Strategy targeting 36,000 factories by 2035.
Dedicating the cluster to King Salman supports the goals of the National Industrial Development and Logistics Program, a key Vision 2030 initiative launched in 2019 to position Saudi Arabia as a global industrial leader.
The cluster will foster localization by creating a robust automotive ecosystem, including industries like tire and battery manufacturing, strengthening the local supply chain
The cluster advances the Kingdom's shift to EVs by adding new manufacturing facilities alongside existing plants like Lucid and Ceer. Hyundai Motors plans to build a factory there, targeting annual production of 50,000 vehicles, including EVs and internal combustion models.
Crucially, the cluster aligns with Saudi Arabia's goal of net-zero carbon emissions by 2060. This follows the Kingdom's record auction of 1.4 million tonnes of carbon credits through the PIF — announced at the sixth Future Investment Initiative in October 2022 in Riyadh.
The cluster marks a key milestone in Saudi Arabia's economic diversification, driving the growth of the automotive sector and sustainable transportation.
It will boost exports, with the Kingdom aiming to manufacture and export more than 150,000 EVs annually by 2026.
The cluster will foster localization by creating a robust automotive ecosystem, including industries like tire and battery manufacturing, strengthening the local supply chain.
For example, the PIF's partnership with Pirelli will boost tire manufacturing and technology expertise, positioning the venture as a regional leader. The cluster will also support the Kingdom's goal of attracting $100 billion in foreign direct investment annually by 2030.
The joint venture between the PIF and Hyundai Motors is expected to attract $500 million in direct investment, while the tire manufacturing facility with Pirelli will receive about $550 million.
The cluster is poised to position Saudi Arabia as a global automotive manufacturing hub by 2030, enhancing manufacturing, infrastructure, and supply chains. It will also play a key role in diversifying the Kingdom's economy and reducing dependence on oil exports.
Finally, the cluster will create thousands of jobs for Saudi nationals. For example, Ceer is projected to attract over $150 million in foreign direct investment, create up to 30,000 jobs, and contribute $8 billion to the Kingdom's gross domestic product by 2034.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
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