South Korean automaker Hyundai Motor Co. partnered with Saudi Arabia’s Public Investment Fund for its planned automotive assembly plant in the kingdom, Bloomberg reports.
About the joint venture
Hyundai’s External Affairs Senior Manager Park Jiwoo disclosed that Saudi Arabia’s sovereign wealth fund will own 70% of the joint venture. Meanwhile, Hyundai will control the remaining 30%.
According to Reuters, South Korea’s President Yoon Suk Yeol spoke in Riyadh where the JV’s signing took place. It signifies the first-ever South Korean vehicle plant in the Middle East.
The parties aim to launch the joint venture and commence operations at the new assembly plant in 2026. PIF asserted that this joint venture “will create thousands of jobs and allow for knowledge and expertise transfer.”
According to Korea JoongAng Daily, the new plant will be a Complete Knock Down (CKD) that will see Hyundai import auto parts into the country for local assembly.
“Korea is Saudi Arabia’s optimal partner in the post-oil era. It is encouraging to see the bilateral relationship develop from the traditional sectors of energy and construction to a cutting-edge industrial partnership that jointly produces automobiles and ships, as well as cooperation in the areas of tourism and cultural exchanges.”
Korean President Yoon Suk Yeol said at the summit
Project details
Hyundai’s new assembly plant will oversee the assembly of both electric and traditional ICE vehicle models by 2026. The South Korean automaker will reportedly get approximately 300,000 sqm for the facility.
The parties expect the facility to hit an annual production output of 50,000 electric and gas-powered vehicles.
The report further indicated that the total investment for the assembly plant’s development will reach more than $500 million.
Significance
The new joint venture will significantly aid both Hyundai and Saudi Arabia’s respective goals. For context, the South Korean automaker aims to boost its EV sales to two million units by 2030, TechXplore asserted.
On the other hand, the kingdom aims to reduce its reliance on oil, with plans to produce 300,000+ vehicles per year by the same year.
“Hyundai will also act as a strategic technology partner to support the development of the new manufacturing plant, by providing technical and commercial assistance.”
Joint Statement
Forming a joint venture with Hyundai is part of the kingdom’s wider strategy to establish a domestic automotive value chain. Its partnership with American EV maker Lucid recently hit a major milestone with the launch of the latter’s first international facility in the country.
Saudi Arabia also previously established the Ceer brand as it seeks to boost the country’s electric vehicle adoption and catch up in the global industry.
The parties have yet to announce the exact location of the new assembly plant. It also remains unclear which models will undergo production in the Saudi Arabian factory.
