Electric vehicles in China are welcomed by the Middle East market

In recent years, facing increasingly severe climate change challenges and urgent emission reduction pressures, Middle Eastern countries have accelerated the promotion of energy green transformation and economic diversification, and the development of green transportation has become an important part of it. Chinese made electric vehicles are increasingly favored by industry professionals and consumers in the region due to their high cost-effectiveness and attractive design. The Middle East is becoming a "blue ocean" for Chinese electric vehicle companies to explore international markets.

Developing electric vehicles is the trend

According to a research report by the International Energy Agency (IEA), the transportation sector currently accounts for about 60% of global oil consumption. To achieve global emission reduction targets, it is necessary to significantly increase the proportion of electric vehicles. Developing electric vehicles has become an important part of promoting green transformation in Middle Eastern countries.

The United Arab Emirates is the first country in the Gulf region to commit to achieving net zero emissions by 2050. The United Arab Emirates has formulated a "National Electric Vehicle Policy" to promote the development of the electric vehicle industry, providing preferential measures such as free registration, free parking, and reduced charging and toll fees. The United Arab Emirates has converted 20% of federal government agency vehicles to electric vehicles and set a goal of at least 30% of government sector vehicles and 10% of road vehicles being electric (pure electric or hybrid) by 2030. By 2050, 50% of road vehicles in the UAE will be electric vehicles.

The development of the electric vehicle industry is an important component of Saudi Arabia's strategic transformation plan, Vision 2030. In 2022, the Saudi government launched a national electric vehicle strategy, which not only increases the market share of electric vehicles, but also provides a series of incentives for consumers to purchase electric vehicles, including tax cuts and subsidies. In addition, the Saudi government has set a goal of achieving a 30% share of electric vehicles in the capital Riyadh and an annual production of 300000 vehicles by 2030. Saudi Arabia has completed the formulation of relevant supporting policies for the infrastructure of electric vehicle charging stations in August 2022, promoting the accelerated implementation of charging infrastructure.

The Egyptian government launched the "Electric Vehicle Development Plan" in 2018, with the goal of having electric vehicles account for 2% of the total number of vehicles by 2025; By 2030, electric vehicles will account for 10% of the total number of automobiles. The Egyptian government has implemented a series of policy measures and incentives to stimulate and support investment and consumption in electric vehicles and charging stations in order to achieve the above policy goals.

The goal proposed by the Qatari government is to achieve a 10% penetration rate of pure electric vehicles, expand 15000 charging stations, and use 100% electric buses for public transportation by 2030.

Governments in the Middle East have launched promotion plans for electric vehicles, accelerating the growth of the electric vehicle market and increasing consumer acceptance and recognition of electric vehicles.

Chinese car companies are competing to make efforts

According to PwC's latest report "Electric Vehicle Outlook 2024: UAE Edition", it is expected that by 2030, the market share of electric vehicles in new passenger and light commercial vehicle sales in the UAE will exceed 15% (approximately 58000 vehicles), and by 2035, this share will increase to 25% (approximately 110500 vehicles). Arthur D. Little, an international consulting firm, predicts that the electric vehicle market in the United Arab Emirates will grow at a rate of 30% annually from 2022 to 2028. Deloitte predicts that the total value of Saudi Arabia's electric vehicle market is expected to reach $28 billion by 2030.

The huge demand for electric vehicles and supporting facilities in the Middle East is undoubtedly a significant advantage and an opportunity that cannot be missed for Chinese car companies. According to statistics from the China Association of Automobile Manufacturers, in 2023, China's new energy vehicle exports will reach 1.203 million units, a year-on-year increase of 77.6%. The proportion of China's new energy vehicle production and sales in the world has exceeded 60%. In addition to meeting the needs of the domestic market, "going global" has become a consistent action in the industry, and the Middle East has become an important market that major car companies are competing to explore. In the first 10 months of 2023, China's automobile exports to the Middle East reached 578100 units, a year-on-year increase of 32.61%, with over 110000 units of new energy vehicles, a year-on-year increase of 66.44%.

Dubai One Road Group Vice President Xie Qiyi introduced that electric vehicles have become a new business card for Chinese brand cars in the Middle East region. During the 2022 Qatar World Cup, China's Yutong Bus provided Qatar with 1002 electric buses specifically designed for the World Cup, which will be put into the country's public transportation system after the end of the World Cup. The 2023 United Nations Climate Change Conference (COP28) will be held in Dubai, and more than half of the electric buses provided for the conference are from Chinese manufacturers such as Yutong, BYD, and Jinlong. In October 2022, Red Flag Electric Vehicle successfully "joined" the Dubai Police Force, becoming the first electric vehicle of the Dubai Police Force. The Red Flag E-HS9 has now become one of the favorite electric vehicles of local chiefs, members of the royal family, and government officials.

At the end of 2022, Geely's electric commercial vehicle brand, Remote Auto, signed an order for 1000 electric commercial vehicles with a UAE company. In September 2023, Geely's other electric vehicle brand, Jike Motors, signed national level general agency agreements with dealers in the United Arab Emirates, Saudi Arabia, Qatar, and Bahrain to jointly build a sales and service network; In March 2024, two electric vehicles, Jike 001 and Jike X, were launched for sale in the United Arab Emirates and Saudi Arabia.

BYD will enter the Middle East market from 2023, entering countries such as the United Arab Emirates, Saudi Arabia, Jordan, Qatar, and Israel. In May 2024, BYD officially opened its first store in Riyadh, the capital of Saudi Arabia. In June 2024, BYD completed its 1000th delivery in the United Arab Emirates. BYD has established a leading position as an electric vehicle brand in the Middle East region.

Other Chinese electric vehicle companies such as Great Wall Motors, BAIC, Changan, Xiaopeng, and Skyworth have also expanded into the Middle East market. Chinese electric vehicles are increasingly favored by Middle Eastern consumers due to their high cost-effectiveness and attractive design.

According to data released by the Israel Association of Automobile Importers, in 2023, Chinese electric vehicles will account for approximately 61% of the Israeli electric vehicle market share. In the first half of 2024, BYD's market share increased to 68.31%, making it the best-selling brand in sales. Among them, ATTO 3 became the best-selling model in Israel with a sales volume of 7265 units in the first half of the year. In countries such as Jordan and Egypt, the sales of Chinese brand electric vehicles are also constantly increasing.

Industry insiders are generally optimistic about the sales prospects of Chinese brand electric vehicles in the Middle East. Heiko Setz, Global and Middle East Electric Vehicle Head at PwC, expects to see more electric vehicle models from Chinese companies in the UAE in the coming years. The Glasgow based research consulting firm, headquartered in Dubai, has released a report stating that Chinese car manufacturers are seizing the opportunity to provide reliable and cost-effective electric vehicles, making them key participants in the UAE's transition to a green future.

Assist the Middle East in improving its industrial chain

Zhang Chenling, CEO of Yilu Group, believes that China's electric vehicle industry chain is complete, and its upstream and downstream batteries, energy storage, infrastructure and other aspects are at the forefront of the world. Many Middle Eastern countries not only aim to import electric vehicles, but also hope to promote the development of their own electric vehicle industry chain through cooperation with China, in order to strengthen their local manufacturing capabilities and help promote the country's industrialization process. The best way for Chinese automobile companies to enter the Middle East market is to choose a reliable local partner, which can fully utilize the preferential policies of the local government and effectively deal with some trade barriers. Both parties can complement each other's advantages and achieve mutual benefit and win-win results through cooperation.

In March 2024, Rongding Consulting released a research report stating that China's outward direct investment in electric vehicle related industries is shifting from North America to Europe, the Middle East, and Asia. The report predicts that China's overseas investment in electric vehicles will remain strong in 2024, with the Middle East and North Africa jumping to second place.

In June 2024, Egyptian GV Investment Company reached a cooperation agreement with China FAW Group, planning to start producing affordable electric vehicles from China FAW in Egypt in the first quarter of 2025. GV Investment Company's goal is to localize 65% of vehicle components and export products to the Middle East, Africa, Europe, and Latin America within the next 3 to 5 years.

In July 2024, BYD signed an agreement with the government of Türkiye. BYD will invest US $1 billion to build a factory with an annual output of 150000 electric vehicles in Türkiye and set up a research and development center. The factory is expected to start production by the end of 2026 and can provide 5000 job opportunities.

At the same time, many sovereign wealth funds of Gulf countries have also shown strong investment interest in Chinese electric vehicles. In June 2023, during the 10th Entrepreneur Conference of the China Arab Cooperation Forum, the Saudi Ministry of Investment signed a $5.6 billion contract with Chinese electric vehicle manufacturer Huayun Tong to establish a joint venture integrating automotive research, development, manufacturing, and sales. In the same month, NIO announced that it had signed a share subscription agreement with Abu Dhabi sovereign fund CYVN. CYVN will make a strategic investment of approximately $1.1 billion in NIO through targeted issuance of new shares and transfer of existing shares.

The Middle East region is located at the junction of Asia, Europe, and Africa, and some countries enjoy duty-free access to the European and North American markets. Chinese electric vehicle companies can not only meet local market demand, but also consider Middle Eastern countries as important partners for exploring third-party markets, radiating to broader markets such as Europe and Africa. The cooperation between China and Middle Eastern countries in the field of electric vehicles has broad prospects and enormous potential.