Hyundai Motor to build new factory, hydrogen ecosystem in Saudi Arabia

[Photo by Yonhap]

South Korean auto giant Hyundai Motor Co. will build its first production facility in the Middle East and establish a hydrogen ecosystem in Saudi Arabia as it expands its global presence.

Hyundai Motor announced that it signed a joint venture agreement with The Public Investment Fund (PIF), a Saudi Arabian sovereign wealth fund, on Sunday to establish a completely knocked-down (CKD) factory in Saudi Arabia.

The joint CKD factory will be established in the King Abdullah Economic City (KAEC) and have an annual production capacity of 50,000 units.

A CKD factory assembles a final product locally with parts delivered to the site, offering the advantage of lower tariffs and reduced initial local investment costs.

Construction of the joint factory is scheduled to begin in the first half of 2024, with production starting in the first half of 2026.

The facility will produce both electric and internal combustion engine vehicles and will be equipped to manufacture various vehicle models.

An investment of over $500 million will be made for the joint factory, with 30 percent from Hyundai Motor and 70 percent from PIF.

KAEC, where the factory will be located, is emerging as the hub of the Middle East’s automotive industry in the western region of Saudi Arabia.

Situated approximately 100 kilometers away from Jeddah, the nation’s second-largest city and the largest seaport, the city is experiencing a surge of investments from the EV industry and automotive parts companies.

Hyundai Motor plans to implement automation processes and region-specific facilities at the joint factory and gradually expand its product lineup, positioning it as a production hub for the Middle East and North Africa region.

In addition to the new factory, Hyundai Motor is also seeking to expand the hydrogen mobility ecosystem in Saudi Arabia.

The company signed a memorandum of understanding (MoU) with Air Products Quadra, a development and investment company based in the Middle East, Saudi Public Transport Company (SAPTCO), and the Korea Automotive Technology Institute, for the development of the local hydrogen mobility ecosystem.

Hyundai Motor plans to build a hydrogen mobility ecosystem and conduct a pilot project for hydrogen electric buses, while exploring cooperation opportunities in government-funded research programs related to hydrogen mobility and exchanging publicly available information about hydrogen mobility.

Hyundai Motor’s expansion into the Middle East aligns with Saudi Arabia’s industrial development policies.

Hyundai Motor Group Executive Chairman Euisun Chung expressed his hope that its expansion will “become a cornerstone for the industrial development that will enable Saudi youth to move forward, beyond mere for-profit opportunities.”

Chung added that the company is committed to making Saudi Arabia the hub of the Middle East’s automotive industry.