Elon Musk Strengthens Relationship with Saudi Arabia Ahead of Tesla Launch

Elon Musk’s relationship with Saudi Arabia has improved, marked by Tesla’s upcoming launch event in Riyadh on April 10, showcasing electric vehicles and innovations. Despite current challenges in the electric vehicle market, both Musk and Saudi Arabia are working towards investment opportunities, raising questions about the kingdom’s future in electric mobility.

The relationship between Elon Musk and Saudi Arabia appears to have improved significantly in recent times. This thaw in relations has gained traction following Musk’s involvement in Donald Trump’s campaign and administration. Trump, who is expected to visit Saudi Arabia shortly, has encouraged the kingdom to invest substantially in the United States economy. Tesla’s upcoming launch event in Riyadh on April 10 is anticipated to showcase not only electric vehicles but also advancements in solar energy and artificial intelligence.

The event will feature the Cybercab and Optimus, Tesla’s humanoid robot, providing attendees with a preview of future innovations. However, details regarding the release timeline of these products in Saudi Arabia have yet to be disclosed. Meanwhile, Tesla faces challenges in other markets, particularly in Europe, where sales have plummeted by 42.6% this year—impacted in part by Musk’s political affiliations.

In Saudi Arabia, electric vehicle sales currently represent a modest 1% of total car sales according to a 2024 PwC report. The market remains dominated by traditional fuel vehicles, as electric vehicle charging infrastructure is notably sparse. Additionally, the Public Investment Fund (PIF) of Saudi Arabia has invested over $1 billion in Lucid, a competitor to Tesla, and is also supporting a local electric vehicle brand named Ceer. The kingdom’s vast desert landscapes and low fuel costs present unique hurdles for the adoption of electric vehicles.

This improving rapport between Tesla and Saudi Arabia follows notable tensions back in 2018 when Elon Musk’s private conversations with the head of the Saudi Public Investment Fund revealed a conflict over Tesla’s privatization. Musk, who was facing a lawsuit from investors claiming he had misled them regarding the financing of the privatization, expressed his frustration through text messages, stating, “You said you were definitely interested in taking Tesla private and had wanted to do so since 2016”. Ultimately, a jury exonerated Musk of any wrongdoing regarding his statements.

The cordiality between Musk and Saudi Arabia was underscored last November when Musk attended a UFC match in New York with Saud Al-Faisal and Donald Trump, alongside a surprise virtual appearance at the Future Investment Initiative summit in Riyadh. As Tesla positions itself to enter the Saudi market, it remains uncertain whether the kingdom will fully embrace the electric vehicle movement or continue its preference for traditional automobiles.

In summary, Elon Musk’s relationship with Saudi Arabia has markedly improved, leading to Tesla’s forthcoming launch event in Riyadh, where they will unveil advanced electric vehicles. Despite facing declining sales in Europe and challenges in Saudi Arabia’s nascent electric vehicle market, the rekindled ties suggest potential investment opportunities. Whether Saudi Arabia will transition toward electric vehicles or maintain its allegiance to traditional cars remains an open question as Tesla prepares for this pivotal entry.

Original Source: www.marketscreener.com