According to those with knowledge of the discussions, Saudi Arabia and Tesla are in talks about establishing a manufacturing facility there as part of the kingdom’s ambitious effort to secure the metals required for electric vehicles and support the diversification of its economy away from oil.
The negotiations could fail because they are still in an early stage. Given that Saudi Arabia already has a collaboration with Tesla’s electric vehicle rival Lucid Group and that Elon Musk, the company’s CEO, has a tense relationship with the Saudis, any transaction could be complicated.
According to some of the sources, Saudi Arabia has been courting Tesla with the offer to buy certain quantities of the metals and minerals the firm requires for its EVs from nations like the Democratic Republic of the Congo. According to The Wall Street Journal, the Saudis approached the Congolese government in June about acquiring assets in the nation, which provides roughly 70% of the world’s cobalt.
According to persons with knowledge of the situation, one option Saudi Arabia is exploring is providing money to commodities trading giant Trafigura for a struggling cobalt and copper project in the Democratic Republic of the Congo that may eventually help supply a Tesla vehicle manufacturing in the kingdom.
If an agreement with the Saudis is successful, Tesla may be able to achieve its goal of selling 20 million vehicles annually by 2030, up from just 1.3 million in 2022. With 10.5 million automobiles sold worldwide in 2022, Toyota ranked first.
As it sets up to create 150,000 cars a year, Lucid, which is majority-owned by the Saudi Public Investment Fund, is anticipated to begin limited vehicle reassembly operations this month at its first international plant on the Red Sea coast of the country.
Musk has stated that Tesla may require another factory by year’s end and that it will probably need around a dozen to reach its own goals. Tesla has stated that it intends to manufacture cars in Mexico in addition to the U.S., China, and Germany.
Requests for response from Tesla and the Saudi authorities were not answered. A Trafigura spokesman declined to comment.
Additionally, a partnership with Saudi Arabia would help the kingdom’s incipient efforts to draw sizable amounts of international investment, which is a priority for de facto ruler Crown Prince Mohammed bin Salman.
The attempts to seize Tesla are part of a larger Saudi initiative to get foreign metals, refine them domestically, and integrate them into a developing renewable energy ecosystem.
The Journal reported earlier this month that the nation is in discussions with the U.S. to acquire the metals in Africa required for the energy revolution, as the White House wants to limit China’s dominance in the EV supply chain and the monarchy looks to purchase $15 billion in global mining assets.
According to Saudi authorities, the sovereign wealth fund of the government made its most recent overtures to Tesla this summer. The crown prince has reportedly desired a Tesla manufacturing site in the kingdom for many years. According to Saudi officials, Tesla is considering the idea but could possibly decide to reject it in the end.
