Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), and South Korea's Hyundai Motor Company have agreed to form a joint venture to build a car manufacturing plant in the kingdom.

PIF will hold a 70% stake in the new JV and Hyundai the remaining 30%. The investment will exceed $500 million, for the production of 50,000 vehicles/year, including both internal combustion engine (ICE) and electric vehicles (EV), Kallanish notes.

The plant groundbreaking is planned for 2024 and production is expected to begin in 2026. Hyundai will also act as a strategic technology partner to support the development of the new manufacturing plant by providing technical and commercial assistance, PIF says.

In January, Saudi Arabia's Ministry of Industry and Mineral Resources signed a memorandum of understanding with Hyundai Motor Company to advance the automotive industry in the country. It is seeking to enhance its non-oil economy and local manufacturing (see Kallanish passim).

“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,” says PIF deputy governor and head of MENA investments Yazeed A Al-Humied.

Regarding the partnership, Hyundai president and chief executive Jaehoon Chang comments: “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.”

Completing the JV agreement is subject to obtaining customary approvals from the relevant authorities and satisfaction of conditions, it adds.

Saudi Arabia's joint venture EV company, Ceer, owned by Taiwan’s Foxconn and PIF, completed land purchasing in December 2022 in King Abdullah Economic City (KAEC) on the Red Sea coast. The firm will build a production facility at the location. Ceer vehicles are scheduled to be available from 2025.

Two steel plant investments are planned in Saudi Arabia to cater to local manufacturing industries, including the automotive industry. Chinese steel conglomerate Baoshan Iron & Steel (Baosteel), in a JV with Aramco and PIF, will build a steel plate mill, while India’s Essar will invest in a hot strip mill in Ras al-Khair on the country's eastern coast.