How the Mideast is preparing for post-oil, EV era of transportation

When BlackRock, the world’s largest asset manager, announced this week that it would add the chairman of the world’s largest oil company, Saudi Aramco, to its board, some investors may have been surprised given BlackRock’s market-leading role when it comes to investing in a low-carbon future. But CEO Larry Fink, who came under hard pressure for embracing ESG, specifically cited Saudi Aramco CEO Amin Nasser’s “understanding of the global energy industry and the drivers of the transition to a low-carbon economy.”

The Middle East, a region known for its oil and gas wealth, is investing in a new, more sustainable future that is likely to be dominated by electric vehicles.

Saudi Arabia is working on its own brand of electric cars. walk. It also owns about 60% of the premium electric car maker Lucid Motorsas its general fund recently invested another $1.8 billion.

The electric vehicle sector is booming in Israel, with deliveries of electric vehicles in the first half of this year 210% higher than the same period last year. In Bahrain, Gauss Auto, an American manufacturer, entered into a partnership this year with a Bahraini company Marson group To open a factory to manufacture electric cars in the country.

“There is a growing recognition that countries need to do something about climate,” said Tammy Klein, chair of the Electric Vehicle Council. “I think Middle Eastern countries are no different.”

“These GIPs, we have here in the US as well. And we have them in Europe, and around the world, not just in electricity, but in shipping and other fuels. So what they’re doing is, I think, very standard. And I think it makes a lot of sense,” Klein said.

One of the latest initiatives to bring the future of electric vehicles to the Middle East is the UAE’s partnership with Einride, an independent electric transportation company based in Sweden focused on the logistics market.

Just over a month ago, Ainreid, ranked 13th on the CNBC Disruptor 50 list for 2023, announced a partnership with the United Arab Emirates Ministry of Energy and Infrastructure to create sustainable charging within the region. It’s just a memorandum of understanding at this point, but it marks Ainreid’s entry into the Middle East and a plan to develop the region’s largest fleet of autonomous and electric vans, which is expected to take five years to complete.

“This collaboration gets to the heart of what Einride delivers — the shift to efficient and sustainable all-electric charging,” said Robert Falk, CEO and founder of the company, in a statement.

Referred to as the Falcon Rise project, Enride plans to deploy a 300-mile freight transport network across Abu Dhabi, Dubai and Sharjah, consisting of 2,000 electric trucks, 200 autonomous trucks and eight charging stations.

“By partnering on this deal, we will be able to show how entire regions can make the switch in a smart and cost-effective way,” Falk said.

Klein was positive about the strategic idea, if only it was an idea at this point. “I think Einride has a really interesting approach in terms of the portfolio that they’re offering electrification and autonomy as well. And I think what they’re offering is really appropriate for a country like the UAE, it’s very holding,” she said.

A common issue that arises when considering the provision of electricity nationwide is the problem of geographic structure. A country’s physical geography and size influence the electricity challenge. For example, in the United States, a cross-country trip requires navigating a vast area. The UAE, however, is a “catch-up country,” Klein said, which makes it easy to fully electrify it.

Like the UAE, the Saudi government is also funding infrastructure to allow EV adoption to grow. Since 2021, the Saudi Electric Vehicle Charging Infrastructure Development Initiative (SEVCIDI) has been working towards the goal of installing 50,000 domestic charging stations by 2025.

Major auto players in the US and China are also vying for a foothold in the electric vehicle market in the Middle East. General Motors is preparing to launch the Cadillac Lyric, GMC Hummer EV, and Chevrolet Bolt EUV in the Middle East this year, while Ford intends to launch electric cars in the region in 2024.

China is also moving into the region with its growing electric vehicle manufacturing sector. The Saudi Ministry of Investment just signed a $5.6 billion deal with Human Horizons, a Chinese electric vehicle maker. A UAE-owned investment firm has a 7% stake in Nio, an electric car maker based in Shanghai, after investing $738.5 million in the electric car maker last month.

Other Chinese electric cars are also hitting the market, incl Zikry in Israel and the Chinese BYD, long backed by Warren Buffett’s Berkshire Hathaway, in Jordan.

The oil does not go away. The Organization of the Petroleum Exporting Countries (OPEC) said last month that global oil demand will rise to 110 million barrels per day in about 20 years, raising global energy demand by 23%. ″“It is not possible to do without oil in the foreseeable future,” said Haitham Al-Ghais, Secretary-General of OPEC, in a speech to the inaugural Energy Conference in Asia, which was held last month in Kuala Lumpur.

Sanctions imposed by the European Union and the United States have “significantly diverted energy flows, but have not constrained or constrained them,” Chevron CEO Mike Wirth said at the recent Aspen Festival of Ideas. “This is why the price of oil today is $70,” he said. “The market is still good.”

The transition to the electric vehicle is coming, but the timing and investment required is enormous. Wirth noted that he has no doubt that GM will make its goal of not making internal combustion engine cars any more by 2035, but that the new supply chains that need to be created in batteries and upstream metals and minerals are a major challenge.

Regardless, the partnership between Einride and the UAE, along with the general wave of electric vehicle excitement, could pave the way for other countries in the region to take action and transform their own infrastructure to support electric vehicles and combat climate change.