Tesla is officially entering the Saudi Arabian market, marking a significant milestone in the relationship between the electric vehicle (EV) giant and the Kingdom. The move follows years of strained ties between Tesla CEO Elon Musk and Saudi Arabia’s Public Investment Fund (PIF), which played a key role in the 2018 controversy surrounding Musk’s attempt to take Tesla private.
The company has announced that Tesla cars will be available for sale in Saudi Arabia starting next month. This is a major development, as Saudi Arabia is the largest market in the Gulf region and had previously been excluded from Tesla’s Middle Eastern operations.
The Rift Between Musk and Saudi Arabia
The tension between Musk and the Saudi government dates back to 2018, when Musk famously tweeted that he had “funding secured” to take Tesla private. The claim was linked to discussions with the PIF, but the deal never materialized, leading to a lawsuit from investors. The dispute escalated when private text messages between Musk and PIF Governor Yasir al-Rumayyan were made public.
Following this fallout, the Saudi PIF pivoted its investment focus toward Lucid Motors, a competing EV startup, investing over $1 billion and securing a majority stake. The fund also backed Ceer, a domestic Saudi EV brand that has yet to launch.
Despite this history, relations between Musk and the Saudi government have improved in recent months. Musk’s growing political influence in the U.S., particularly his association with former President Donald Trump, appears to have played a role in mending ties. Trump has recently pushed for increased Saudi investments in the U.S., including a proposed $1 trillion commitment over four years.
Tesla’s Grand Entrance into Saudi Arabia
Tesla’s launch event in Riyadh, scheduled for April 10, will showcase its latest EVs and innovations, including products powered by solar energy. The company has also teased the unveiling of its autonomous vehicle, the Cybercab, and the humanoid robot Optimus, highlighting Tesla’s advancements in AI and robotics.
Guests attending the event have been invited to indicate their preferred Tesla models, suggesting that Tesla is tailoring its offerings to the Saudi market.
However, Tesla’s entry into Saudi Arabia comes at a time when the company is facing challenges globally. In Europe, Tesla’s market share has declined significantly due to Musk’s political affiliations, and in the U.S., activists have protested his leadership in government reforms that led to massive job cuts and program cancellations.
Challenges in the Saudi EV Market
Despite Tesla’s plans, the Saudi market presents unique challenges. EV adoption remains slow, with a 2024 PwC report estimating that electric vehicles account for only 1% of total car sales in the Kingdom. Saudi Arabia’s cheap fuel prices and underdeveloped EV charging infrastructure further complicate the transition to electric mobility. Long desert roads with few charging stations make widespread EV adoption difficult.
Nevertheless, Tesla’s entry could be a turning point. With Saudi Arabia’s ambitious Vision 2030 initiative pushing for economic diversification and sustainability, the government may invest in the necessary infrastructure to support EV growth.
The Road Ahead
One of the first public signs of improved relations between Musk and Saudi officials came in November when Musk was spotted sitting alongside Yasir al-Rumayyan and Trump at a UFC fight in New York. Around the same time, Musk made a surprise virtual appearance at the Riyadh Future Investment Initiative summit, signaling a warming relationship.
With Tesla’s launch in Saudi Arabia, the company is not only expanding its global footprint but also potentially reshaping the Kingdom’s automotive landscape. However, whether Tesla can overcome the challenges of the Saudi market remains to be seen.
