Middle East Is Ideally Situated To Serve As A Major Electric Vehicle (EV) Production And Distribution Center

As a result of global initiatives to diversify supply chains and the push to adopt green technology, the Middle East Region is in a prime position to capitalise on an opportunity for EV production. Drive Type (Plug-in Hybrid and Pure Electric), Vehicle Type (Passenger Cars and Commercial Vehicles), and Geographic Region all contribute to the complexity of classifying the EV market in the MENA region (United Arab Emirates, Saudi Arabia, South Africa, Egypt, and Rest of Middle-East and Africa).

According to a report published by Mordor Intelligence, a research firm, the EV market in the Middle East and Africa was worth US$40.25 million in 2021 and is projected to be worth US$93.10 million by 2027. A compound annual growth rate of 15% is predicted for it during the next few years. (2022 - 2027). It's inevitable that the COVID-19 pandemic will have an effect on the electric car market in the Middle East and Africa. As the market for electric vehicles has slowed in the region, many factories have been forced to close because of the ongoing lockdowns, the need to adhere to socially distant norms, and the scarcity of personnel necessary to run manufacturing lines while maintaining all necessary safety precautions. However, the rapidly increasing year-over-year adoption rate of electric vehicles across the area is anticipated to lead to substantial growth in the market. During the forecast period, the market is likely to be driven by the increasing attention of governments across the region to promote the usage of electric vehicles and the growing awareness of energy storage solutions in the renewable-based power sector. Additionally, in the future years, the EV market in the Middle East and Africa is projected to benefit from the expansion of the 5th Generation-based communications network and the implementation of Vision Documents in Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait.

The World Bank reports that manufacturing contributed 14% to GDP in the MENA region in 2018, up from 12.6% in 2016. Governments in the region are actively working to encourage manufacturing as part of their diversification efforts in order to meet the needs of their citizens and the economic aspirations for the year 2030 that have been inspired by technological disruption.

As more and more electric vehicle (EV) models are released every year, there has been a gradual increase in demand in the Middle East for these environmentally friendly vehicles. In line with its promise to achieve zero net carbon emissions by 2060, Saudi Arabia plans to have at least 30 percent of its vehicles be electric-powered by 2030. Lucid, a producer of electric vehicles, said last year that it intended to construct the first international manufacturing factory in Saudi Arabia, with annual production of 150,000 vehicles. The facility would be located in the King Abdullah Economic City.

The United Arab Emirates, meanwhile, hopes to have 42,000 EVs driving throughout the country within the next decade. The United Arab Emirates (UAE) opened its first electric car production facility in Dubai Industrial City last month at a cost of US$408 million. The facility has a yearly capacity of 55,000 vehicles. Tesla is leading the drive in the GCC region's EV industry, but other brands, such as BMW, Audi, and Mercedes-Benz, are hot on its heels.

Elaborating further on this line, Noor Hajir, head of transport planning and mobility at WSP Middle East, stated in her recent media outing, “Positive signs may be seen in the Gulf region, with many developers, especially in Saudi Arabia, embracing greener options and future mobility solutions like electric vehicles to assist them reach their long-term net-zero goals. Developers are increasingly installing electric vehicle charging stations in high-traffic areas like shopping centres and central business districts as a means of advertising to and enticing customers.”

Hajir is pessimistic that the region will ever have the infrastructure in place to enable public and private EV adoption a reality. She made these comments to a Middle Eastern media outlet: "The Middle East may be behind the curve compared with more established nations in providing roadside infrastructure to facilitate and reward mass private EV ownership, which relies heavily on public sector backing."

Varying countries in the Middle East are at different stages of EV infrastructure development, according to Dr. Hamid Haqparwar, managing director of BMW Group Middle East. However, he shares the opinion of many other specialists that the region's long-term trajectory is obvious. Mass adoption of electrified vehicles per market is "a matter of when, not if," and greener modes of transportation are a major part of the sustainability visions outlined by governments.

Manufacturers will continue to grow their EV portfolio, according to Haqparwar, who claims that the region is seeing a greater choice of EVs reach its markets during the present "transition" phase. He told the media that rising demand in the Middle East was a result of supply increases and infrastructure developments. Within the next five years, I anticipate increased demand for electric vehicles.

Raw Resource Accessibility Can Boost The Region

The entire Middle East is on the edge of discovering a completely new sector which is ideally linked with its aim of becoming a worldwide EV manufacturing & sales hub, in addition to capitalising on a chance for EV production. The region needs to prioritise both the manufacture of energy storage units and the raw materials needed to produce these units if it is to acquire the status of global EV manufacturing and sales hub. According to Worley's analysis, significant quantities of copper, lithium, and other natural resources lie beneath the surface in the Middle East, making it an ideal location for the production of these energy-storing devices.

There is a geological foundation spanning two continents and 33 nations called the Tethyan mineral belt. It begins in western France and winds through the Middle East and into Malaysia, where it emerges into the open. You can find a lot of valuable base metals in the belt. But because so much of it has been under-explored up until now, it is poised for major new discoveries. Darryn Quayle, Worley's Vice President of Resources, adds, "The belt is a comparatively undiscovered portion of the Earth, compared to mining zones in the Andes or Africa." However, our investigations have led us to believe that substantial copper, lithium, and other mineral resources lie beneath the earth's surface. Electric vehicles, wind generators, batteries, and many other technologies are dependent on these materials to function. Quayle emphasises that "the Tethyan belt extends across the Kingdom of Saudi Arabia." As the Kingdom strives to become a major role in the global energy transition, this is a significant potential for its burgeoning mining industry. Along with Oman and other countries in the area, it is quickly adapting to this new reality by establishing itself as a "emerging mining nation."

While Saudi Arabia is undergoing its most profound and economic revolution in its history, the country is also experiencing a surge in demand for commodities used in the energy transition. Quayle states, "The Kingdom continues to become more outward-looking and progressive, and its Crown Prince is committed to diversifying the country's traditional oil and gas-based economy." The government's resolve to decarbonizing the country by 2060 is informed, in part, by the realisation that manufacturing requires access to low-carbon energy. Low-carbon energy sources should be prioritised wherever they may be used as part of the energy transition. And it all starts with the first shovelful of dirt that the miners haul out. Quayle explains that "about 12% of global produced energy is consumed by mining and its supply chain," with that number rising to almost 20% of global production in some emerging countries. Creating a battery uses up to twenty times as much energy as the battery can store, so it's important to consider this while sourcing materials. 'Over the life of a battery, the CO2 reductions pile up several times over,' he says. An electric vehicle's carbon footprint is greater if its battery anode was manufactured using electricity generated by burning coal rather than renewable energy. That's why it's so crucial to consider the carbon intensity of the energy used in producing the anode and cathode, the battery's two most vital components. This is why Saudi Arabia is an ideal location for the growth of these sectors.

What the Middle East has going for it in terms of competition

Saudi Arabia is positioning itself to attract energy-intensive sectors like anode and cathode production because of its capacity to create enormous amounts of solar power and considerable wind power. In addition, it possesses the necessary components to complete the task. In the Western Hemisphere, Europe is leading the charge toward a clean energy future and widespread use of electric vehicles. However, the Middle East is a perfect fit for the region as a whole. Building a mining or battery processing facility in Saudi Arabia is substantially less difficult than in the United Kingdom or northern Sweden. The cost-competitiveness of renewable energy sources also means lower operating costs. As a result, the Middle East may become a more attractive destination for importing battery-grade materials, reducing supplies to Europe, where the majority of the current demand is. With this newfound wealth, the mining and processing industries in the Kingdom may quickly grow. Although some improvements to the underlying infrastructure are still required, Quayle observes that the will to progress is present. There are plans to triple the rail network and add an additional 1,000 km of track to transport the million tonnes of raw material to local processing facilities in Saudi Arabia because, while the country has excellent pipelines and ports for oil and gas, it is impossible to fit cathode and anode material into a pipe. Ports will also undergo alterations.

These changes are a result of the worldwide competition to construct 'gigafactories,' which are enormous battery plants capable of producing hundreds of thousands of packs to aid the automobile industry's transition to all-electric vehicles. Approximately 260 gigafactories are now being built around the world. There are over 160 in China, while the rest are spread around the West. It's the beginning of the industrial revolution. These mega-factories require massive amounts of inputs. The World Bank's Climate-Smart Mining team estimates a need for five hundred percent more lithium, cobalt, and graphite, one hundred percent more nickel, and seven percent more copper, each of which is a staggering figure when placed in the context of the current global copper market. "We're in a race for commodities," Quayle says.

The Middle East must play a pivotal role in resolving these shortages. The raw materials needed to power the proposed gigafactories are in short supply, but the Middle East can make up the difference over the next 15 years. Saudi Arabia has the potential to lead the way in the development of an integrated mining supply chain for energy transition minerals, albeit this is not something that can happen quickly. Quayle claims it can step into the position of cathode and anode aggregator and supplier to battery manufacturers. As long as a mine's output satisfies certain specifications, the mine's owners can sell that product to a temporary cathode or anode manufacturer, he explains. Using its abundant, cheap, renewable power source, Saudi Arabia can generate vast quantities of high-quality cathode and anode material at a single site. It may save a lot of money on transportation if the raw materials were processed close to the mines, which would be dispersed across the Tethyan belt.

Imparting Time-Tested Knowledge To A Sector In Flux

Mining businesses and investors find the Middle East and Saudi Arabia in particular attractive because of the region's track record of successfully completing large or complicated infrastructure projects for the oil and gas industry. This means that it can rapidly build sophisticated infrastructure, which is essential in the modern mining industry. The mining industry has an opportunity to reimagine its place in the manufacturing landscape. How to supply massive quantities of material rapidly is a basic problem that the global mining community must work together to address. And that's a once-in-a-lifetime chance for hopeful miners with untapped supplies of key ingredients for decarbonization just under their feet.

Saudi Arabia may broaden its economic base by supplying a newly emerging market committed to cutting carbon emissions. Furthermore, by providing the globe with the essential resources found in the Tethyan belt, it can hasten the process of becoming carbon neutral.