Enovate Motors, a Chinese electric vehicle (EV) start-up, plans to build a factory in Saudi Arabia, following a state visit by President Xi Jinping to the kingdom.
The carmaker, which counts Shanghai Electric Group as an early investor, said on Monday that it had signed an agreement with Saudi Arabian authorities and joint-venture partner Sumou to set up an EV plant with an annual capacity of 100,000 units.
The factory, which will include a research and development centre, will cost about US$500 million, Enovate said in a statement.
The deal was signed last Wednesday, a day before Xi’s meeting with King Salman bin Abdulaziz in Riyadh. It is among the 34 energy and investment deals signed during Xi’s visit to Saudi Arabia between December 7 and 10, which are aimed at strengthening strategic partnerships between the two nations.
Chinese President Xi Jinping met Saudi Crown Prince Mohammed bin Salman during his visit to the kingdom last week. Photo: SPA/AFP
Not all the deals were made public, but the Saudi Press Agency reported that Chinese and Saudi Arabian companies signed dozens of agreements covering green energy, information technology, infrastructure and health.
Enovate said the deal could pave the way for it to tap the financial strength of Saudi investors, including the country’s sovereign wealth fund and Saudi Aramco, the world’s largest oil production company.
It did not reveal details about the plant, such as the start of construction and commencement of operations.
“Chinese EV companies have been actively looking to expand outside the mainland as they improve manufacturing capabilities,” said Phate Zhang, founder of Shanghai-based electric-vehicle news site CnEVpost. “Many EV start-ups may have better chances in untapped overseas markets than at home.”
China is the world’s largest EV market where three out of every five new cars taking to the streets are expected to be powered by batteries in 2030, according to a UBS forecast last year.
But competition is expected to intensify as new models developed by technology giants such as artificial intelligence firm Baidu and smartphone vendor Xiaomi hit the market next year.
Chinese electric carmakers including BYD, Xpeng and Nio have been selling their vehicles in Europe and Southeast Asia, trying to become international players with a considerable market share outside the mainland.
Under the “Made in China 2025” strategy, Beijing wants the country’s top EV makers to generate 10 per cent of their sales overseas by 2025.
Enovate, founded by Chinese entrepreneur Zhang Hailiang in 2015, has a production line in Shaoxing city in eastern Zhejiang province.
Shanghai Electric, one of the mainland’s three largest producers of coal-fired power generating equipment, took a stake in Enovate in 2019 through its venture-capital unit.
In October 2020, Enovate raised more than 5 billion yuan in a financing round, in which local Chinese government funds and large state-owned banks took part.
It said at that time that the fresh capital would be used for R&D, expanding manufacturing capacity and building a sales network.
Keyword: Chinese EV start-up Enovate to build plant in Saudi Arabia as President Xi’s visit to Riyadh begins to pay off