Hyundai eyes Saudi EV plant as Korea bets on Middle East boom

Hyundai Motor Co. is set to build an electric vehicle assembly plant in Saudi Arabia as South Korean companies are increasingly tapping growth opportunities in the Middle Eastern country.

Hyundai, Korea’s top automaker, earlier this year signed a memorandum of understanding with the Saudi trade ministry to build an EV assembly factory in Saudi Arabia.

Under the initial agreement, Hyundai will send semi-finished electric vehicles and parts to Saudi Arabia under a complete knock-down (CKD) scheme to assemble them for sale in the local market.

The two sides will likely ink a formal deal when Hyundai Motor Group Chairman Chung Euisun visits the country next month, industry sources said on Monday.

Hyundai is the second-largest car seller in Saudi Arabia with 47,218 vehicle sales in the first half, following the top seller, Japan’s Toyota Motor, which sold 112,584 units.

The Korean automaker entered the Saudi Arabian market in 1976 by exporting 15 Pony sedans to Hyundai Construction & Engineering Co. operating in the kingdom.

An EV assembly plant in Saudi Arabia would serve as Hyundai’s production base for its entry into the eco-friendly car market in the Middle East, industry officials said.

KOREAN RUSH TO SAUDI ARABIA

Hyundai Motor Group’s other affiliates and EV-related Korean companies are also seeking business opportunities in Saudi Arabia.

Hyundai KEFICO Corp., an automotive electronic management system (EMS) affiliate of Hyundai Motor, recently signed a 250 billion won ($189 million) deal to supply EMS and power conversion systems to Ceer Motors, a joint venture between the Public Investment Fund (PIF), Saudi Arabia's sovereign wealth fund, and Taiwanese tech firm Foxconn.

US EV maker Lucid Motors, in which the PIF has a 60% stake, plans to build an EV plant in Saudi Arabia with an annual production capacity of 150,000 units by 2024.

Industry officials said Lucid will likely secure batteries from Korea’s LG Energy Solution Ltd.

In March, LG showcased Lucid EVs equipped with its battery cells at Interbattery 2023, Korea’s largest battery exhibition.

Hankook Tire & Technology Co. said in August it partnered with Bin Shihon Group, Saudi Arabia’s largest tire dealer, to exclusively sell its high-performance EV tires – iON evo and iON SUV – in the Middle Eastern country.

NEOM PROJECT FOR POST-OIL ERA

Saudi Arabia, the world’s largest oil producer, is aggressively seeking to roll out electric cars across the country in preparation for the post-oil era.

Mohammed bin Salman, the crown prince and prime minister of Saudi Arabia, has vowed to turn a third of all cars running in the Kingdom’s capital city of Riyadh into electric vehicles by 2030.

He is also leading a $500 billion project to build Neom, a smart city to be fully run on renewable energy such as solar power and green hydrogen as well as cutting-edge technologies, including 5G networks, the Internet of Things, cloud computing and robotics, in a desert area in the kingdom's northern Tabuk Province.

All cars in Neom City will go electric, officials said.

Last November, the Saudi crown prince, dubbed “Mr. Everything” for his astronomical wealth and many business portfolios, visited Seoul to discuss business cooperation with Korean companies.

During his stay in Seoul, the Saudi leader clinched several deals worth a combined $30 billion with Korean companies.

Hyundai Motor Chairman Chung and other top business leaders are expected to visit Saudia Arabia next month to discuss business partnerships in various areas, sources said.

Write to Il-Gue Kim and Sungsu Bae at Black0419@hankyung.com

In-Soo Nam edited this article.