Tesla is in early talks with Saudi Arabia for a potential partnership that could help the automaker achieve its goal of selling 20 million vehicles per year by 2030. The discussions are at a preliminary stage and could still fall through due to complications.
Saudi Arabia has been actively pursuing Tesla, offering the company the right to purchase metals and minerals needed for its electric vehicles (EVs) from countries such as the Democratic Republic of Congo, which supplies around 70% of the world’s cobalt. The Saudi government approached the Congolese government in June to secure assets in the country.
One proposal being considered is for Saudi Arabia to extend financing to commodities-trading giant Trafigura for a struggling Congolese cobalt and copper project. This project could ultimately aid in supplying a Tesla vehicle factory in the kingdom. A partnership with Saudi Arabia could significantly benefit Tesla’s expansion plans, as the company aims to ramp up production from around 1.3 million vehicles in 2022 to 20 million vehicles by 2030.
However, any potential deal with Saudi Arabia may face challenges. Tesla CEO Elon Musk has had a contentious relationship with the Saudis, and the kingdom already has an existing partnership with Lucid Group, a rival electric vehicle manufacturer. Lucid, which is majority-owned by the Saudi Public Investment Fund, is set to begin vehicle reassembly on a limited scale this month.
Saudi Arabia’s efforts to attract significant foreign investment and gain access to metals abroad align with its priority to promote renewable energy. The country is in talks with the U.S. to secure metals in Africa for the energy transition while attempting to reduce China’s dominance in the EV supply chain. Saudi officials have stated that the discussions with Tesla started this summer and that Crown Prince Mohammed bin Salman has long desired a Tesla manufacturing facility in the kingdom.
It is worth noting that previous interactions between Tesla and the Saudis have been controversial. In 2018, Saudi Arabia’s sovereign-wealth fund, the Public Investment Fund (PIF), purchased $2 billion worth of Tesla shares, and the fund’s chairman, Mohammed bin Salman, discussed further investment with Musk. Musk’s subsequent tweets about taking the company private led to legal issues, and PIF eventually sold its Tesla shares at a lower price. PIF also invested $1 billion in Lucid in 2018, with the condition that the company establish a factory in Saudi Arabia.
While Tesla and the Saudi government have not provided official comments on the talks, a deal between the two parties would be significant for both Tesla’s expansion plans and Saudi Arabia’s efforts to attract foreign investment.
Sources:
– The Wall Street Journal