The Public Investment Fund (PIF) of Saudi Arabia and the renowned Hyundai Motor Company have recently unveiled a significant milestone in the automotive industry. In a joint venture agreement, these two powerhouses have joined forces to establish a highly automated vehicle manufacturing plant on the soil of Saudi Arabia. This monumental partnership, announced at the Saudi-Korean Business Forum, is poised to redefine the automotive landscape in the region and beyond.
The strategic collaboration will witness PIF holding a substantial 70% stake in the newly minted joint venture, with Hyundai maintaining the remaining 30%. Hyundai's role will extend beyond mere ownership, as the company is set to be the pivotal technology partner, offering critical technical and commercial assistance in the development of this state-of-the-art manufacturing facility. With an estimated total investment exceeding $500 million, this venture is undeniably a game-changer in the automotive sector.
The overarching objective of this joint venture is to establish a manufacturing plant capable of producing 50,000 vehicles annually, encompassing both internal combustion engine (ICE) and electric vehicles (EV). The groundbreaking ceremony for this ambitious project is scheduled for 2024, with production slated to commence in 2026. This landmark manufacturing facility is not only poised to boost the automotive industry but will also play a pivotal role in the economic development of the region.
One of the significant implications of this collaboration is the creation of thousands of jobs and the transfer of knowledge and expertise. Hyundai's commitment to localizing its vehicles in the Kingdom of Saudi Arabia will expedite the development of the nation's automotive and mobility ecosystem, catalyzing further investments in this burgeoning sector.
This partnership is not just an isolated endeavor but aligns seamlessly with PIF's broader vision to elevate Saudi Arabia's status as a global automotive player. It seeks to drive transformative change in the sector by enhancing manufacturing capabilities, fortifying infrastructure, and optimizing supply chains not only in Saudi Arabia but also in the international arena. It follows other major investments in the sector, including the launch of Tasaru, the National Automotive and Mobility Investment Company, dedicated to localizing automotive supply chains and manufacturing capabilities. Moreover, PIF, in collaboration with the Saudi Electricity Company, announced the Electric Vehicle Infrastructure Company with plans to install over 5,000 electric car fast chargers across Saudi Arabia by 2030, further positioning the nation as a hub for electric vehicle technology.
As the third-largest automaker globally in terms of sales volume, Hyundai Motor Group brings invaluable technical capabilities and expertise to the table. Their proven ability to design, develop, and operate a vehicle manufacturing plant will undoubtedly elevate the standards and quality of automotive manufacturing in Saudi Arabia.
This joint venture underscores PIF's unwavering commitment to fostering national and regional champions, cultivating local capabilities, attracting cutting-edge technology, and generating highly skilled job opportunities in Saudi Arabia's automotive and mobility sectors. PIF's strategic investments are also deeply involved in the process of localizing automotive component manufacturing in Saudi Arabia, thereby fortifying the automotive supply chain.
Yazeed A. Al-Humied, the Deputy Governor and Head of MENA Investments at PIF, emphasized the significance of this partnership, stating, "Partnering with Hyundai is another significant milestone for PIF in successfully enabling and accelerating the growth of Saudi Arabia's automotive ecosystem – one of our 13 priority sectors. Our investment in vehicle manufacturing with Hyundai Motor Company is a pivotal milestone, aligning closely with our existing stakes in Lucid and Ceer Motors, and amplifying the breadth of Saudi Arabia's automotive and mobility value chain."
In response to this strategic partnership, Jaehoon Chang, the President and CEO of Hyundai Motor Company, expressed his enthusiasm, "We are excited about the potential of this venture to drive significant advancements in vehicle production, fostering a sustainable and eco-friendly automotive future in the region. Our joint efforts will create opportunities for innovation and environmental progress."
While the ink is drying on the joint venture agreement, the completion of this endeavor remains subject to customary approvals from relevant authorities and the satisfaction of necessary conditions. Nonetheless, it is evident that the union of PIF and Hyundai heralds a promising and transformative era for Saudi Arabia's automotive industry and is poised to leave a profound impact on the global automotive landscape.
