Saudi Arabia is reportedly in early discussions with Tesla, the American electric automaker, to establish a manufacturing facility in the country. The objective is to diversify the Saudi economy away from oil. The Gulf nation has been enticing Tesla with the offer to purchase specific quantities of metals and minerals required for electric vehicle production from countries such as the Democratic Republic of Congo (DRC).
In an attempt to secure assets in the DRC, which is responsible for supplying approximately 70% of the world’s cobalt, Saudi Arabia approached the Congolese government in June. One possible proposal being considered is providing financing to Trafigura, a commodities-trading giant, for a struggling cobalt and copper project in the Congo. This project could potentially supply a Tesla vehicle factory.
If successful, a partnership with Saudi Arabia could assist Tesla in achieving its goal of selling 20 million vehicles per year by 2030. Currently, Tesla manufactures electric vehicles in the United States, China, and Germany, with plans to expand to Mexico. The addition of a manufacturing facility in Saudi Arabia would not only benefit Tesla but also support the kingdom’s efforts to attract foreign investment, an important objective for Crown Prince Mohammed bin Salman.
The talks between Saudi officials and Tesla, initiated by the Saudi Public Investment Fund, are in the early stages. Tesla, while considering the conversation, may still reject the proposal. The Saudi Arabia initiative to collaborate with Tesla is part of a wider strategy by the kingdom to access metals internationally, refine them domestically, and integrate them into the emerging renewable energy ecosystem.
Source: Wall Street Journal
– Cobalt: A chemical element with a blue-white metallic appearance. It is primarily used in the production of batteries.
– Democratic Republic of Congo (DRC): A country located in Central Africa, known for its significant cobalt reserves.
– EV: Abbreviation for electric vehicle, a mode of transportation powered by one or more electric motors.
– Public Investment Fund: Saudi Arabia’s sovereign wealth fund, responsible for managing the country’s investments and diversifying the economy.
– Wall Street Journal