Hyundai Motor Company announced it had signed a joint venture agreement with Saudia Arabia’s Public Investment Fund (PIF) to establish a vehicle assembly plant in Saudi Arabia, after the two partners signed a memorandum of understanding (MoU) just last month.

Total investment was expected to exceed US$500m with PIF taking a 70% stake in the JV and Hyundai the remaining 30%. The automaker would also be the company’s strategic technology partner, supporting plant construction and providing products and technology.

Construction of the ‘“’highly automated’”’ 50,000 units/year plant was scheduled to begin in 2024 with production to start in 2026. The factory would produce both internal combustion engine (ICE) vehicles and electric vehicles (EVs), initially from completely knocked down (CKDs) kits imported from South Korea with local content expected to increase gradually.

Hyundai was reported to be the second largest auto brand in Saudi Arabia with 47,000 sales in the first half of 2023, behind only Toyota which sold 113,000. Its best selling models were the Sonata and Elantra passenger cars. The new plant would also possibly make vehicles for other countries in the region.

Hyundai said in a statement: “The new plant will create thousands of jobs and allow for knowledge and expertise transfer. The localisation of Hyundai’s vehicles will accelerate the development of Saudi Arabia’s automotive and mobility ecosystem and attract further investments to the sector and the wider economy.”

PIF is playing an increasingly important role in helping Saudi Arabia develop an automotive industry as the country diversifies its economy away from fossil fuels. The fund recently launched the National Automotive and Mobility Investment Company (Tasaru) dedicated to localising automotive supply chains and manufacturing ability. It also has major stakes in two EV startups.

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PIF recently also formed a joint venture with Saudi Electricity Company with plans to build 5,000 EV fast chargers across the country by 2030, to support the Saudi crown prince and prime minister Mohammed bin Salman’s ambitious 2030 EV targets.

PIF deputy governor and head of regional investments, Yazeed A Al-Humied, said in a statement: “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… 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.”

Last year, KG Mobility signed an agreement to supply 170,000 CKD SUVs to a Saudi distributor over eight years with deliveries scheduled to begin this year.