The Gulf Arab states, led by the United Arab Emirates and Saudi Arabia, have witnessed a rise in the adoption of electric vehicles as fuel subsidy reforms and government policies are encouraging a gradual shift away from internal combustion engine cars. Urbanization and economic growth in the Gulf Cooperation Council states have led to an increase in greenhouse gas emissions, prompting governments across the region to adopt policies to encourage the electrification of the transportation sector, both public and private.
A United Nations Development Program report has found the GCC to be the world’s most urbanized subregion. The urbanization rate for Qatar and Kuwait reached 99.2% and 98.3% respectively by 2015. Bahrain, the UAE, and Saudi Arabia reached an urbanization rate of more than 80%, while for Oman it was 77.6% in 2015. This is expected to intensify with growing urban sprawl.
According to an International Energy Agency report prepared for the G7, cities account for around three-quarters of global energy consumption and 70% of greenhouse gas emissions. A summary of the report stated that “Cities need to raise their level of ambition in areas such as energy efficiency to meet the targets set at the COP28 climate change conference in Dubai.” The report added, “While a small number of cities are stepping up through sustainability and carbon dioxide (CO2) reduction targets, more need to come forward,” noting that only one in five cities has set a target to reach net-zero emissions.
The UAE and Saudi Arabia, which have invested in diversifying their domestic energy sources, have launched initiatives designed to reduce emissions from the transportation sector, such as Dubai’s driverless metro and Saudi Arabia’s railway and metro links. However, challenges such as extreme summer temperatures and the need for massive investment in charging infrastructure remain.
Saudi Arabia
The King Abdullah Petroleum Studies and Research Center released a report examining the expected growth in electric vehicle sales in Saudi Arabia and their impact on oil consumption, carbon dioxide emissions, and electricity demand. Oil demand in Saudi Arabia’s transportation sector peaked in 2015 but has since declined due to domestic fuel price adjustments and improved efficiency, the report noted. Between 2000 and 2016, the total number of vehicles increased by an average 10.4% annually, from 1.8 million to 9.2 million. Although demand growth slowed after 2016, it is expected to recover over the coming years as economic development leads to the expansion of cities and highway networks, contributing to the increase in demand for vehicles. The study estimated that the number of internal combustion engine vehicles in Saudi Arabia will reach 29.6 million by 2050, 2.5 times the 2023 level.
Saudi Arabia ranks ninth in the world in gasoline consumption, and fourth in the world in terms of per capita consumption of gasoline, the report stated. The rapid increase in demand for oil in the road transportation sector and the continued increase in the number of vehicles in use have raised concerns about future oil exports, future energy consumption, and greenhouse gas emissions, it added.
Megaprojects in the kingdom, such as Neom, the Red Sea project, Qiddiya, and Diriyah Gate, are expected to significantly impact demand for oil in the transportation sector. These projects are part of the Saudi Vision 2030 initiative, which aims to diversify the economy, reduce dependence on oil, and boost tourism and investment.
Under a business-as-usual scenario, demand for oil in transportation is projected to reach 67 million tons of oil equivalent by 2050. However, with a high penetration of electric vehicles, consumption could be cut by 20.2%, which would result in a savings of 13.5 million tons of oil equivalent, according to the KAPSARC report.
The authors used three scenarios to estimate electric vehicle adoption in Saudi Arabia by 2050: The number of electric vehicles would reach 14.8 million in a low growth scenario, 17.8 million in a moderate growth scenario, and 20.7 million in a high growth scenario. This increase would lead to higher demand for electricity. Electric vehicles would require 47.7 terawatt-hours annually in the high growth scenario, 38.2 TWh in the moderate scenario, and 28.6 TWh in the low growth scenario. By 2050, electric vehicle adoption could reduce oil consumption in the transportation sector by 11% (low growth), 15.4% (moderate growth), and 20.2% (high growth). The business-as-usual scenario projects 198 million tons of carbon dioxide emissions by 2050 but would drop to 158 million tons in the high growth scenario.
Although electric vehicle penetration remains low compared to traditional gasoline and diesel vehicles, the Saudi government has emerged as the regional front-runner in establishing an electric vehicle manufacturing base. Saudi Arabia’s sovereign wealth fund, the Public Investment Funds, has invested heavily in the Lucid Group electric vehicle producer and in 2024 committed another $1.5 billion to the firm. In 2023, Lucid began producing electric vehicles from a facility in the King Abdullah Economic City, which has an initial production capacity of 5,000 units per year, with plans to expand to 155,000.
To support the anticipated growth in electric vehicles, it plans to produce lithium to establish a secure supply chain. In January, Saudi Aramco signed a preliminary agreement with fellow state-backed firm Ma’aden to form a new “transition minerals JV.” The joint venture will have a particular focus on lithium, with an eye on beginning commercial production by 2027.
Saudi Arabia expects global lithium demand to increase sevenfold by 2030 compared with 2022 levels, and the partners say their operations will help meet an anticipated twentyfold increase in domestic demand for lithium between 2024 and 2030 “supporting an estimated 500,000 electric vehicle batteries and 110 gigawatts of renewables.”
Despite its ambition, the wider adoption of electric vehicles in Saudi Arabia faces challenges and will take time. Electric vehicles are still more expensive than conventional cars due to battery costs and limited local production and insufficient public and private charging stations, the KAPSARC report noted.
Riyadh plans to install solar and wind-powered charging stations. However, scaling up these stations and modernizing the electricity grid are necessary to meet increased demand from electric mobility. The kingdom is proceeding at pace with the addition of renewable energy capacity, which is set to nearly double to 12.7 GW by the end of 2025. It also plans to spend an estimated $270 billion to modernize and expand its electricity grid.
The UAE
The UAE has ambitious plans to decarbonize transportation, aiming for a 50% share of electric vehicles in total car sales by 2050, which would contribute to a 40% reduction in energy consumption in the sector, according to the third nationally determined contribution submitted to the United Nations. Abu Dhabi is also working on reducing emissions from the transportation sector by 20% by 2035. “As part of this commitment, the UAE is developing a national policy for electric vehicles, which serves as a framework to align standards for EV charging infrastructure, enhance UAE competitiveness, and reduce energy consumption in the transportation sector. The main targets of this policy include unifying infrastructure standards for EV charging stations across the UAE, supporting the national roadmap for EV charging stations, and coordinating with federal authorities on the registration of electric vehicles,” the nationally determined contribution stated.
Alongside the electric vehicle mandates, the UAE has adopted a national biofuel policy to enhance competitiveness and reduce transportation emissions. The policy sets standards for biofuels and plans to introduce biodiesel blends between now and 2050. Biodiesel is a clean burning fuel made either from vegetable or animal fats and can be used to power diesel engines and electric generators.
The UAE also plans to nearly double its rail infrastructure over the next decade, promoting railways as a sustainable mode of transportation. It is also mapping air corridors for air taxis and cargo drones, aiming to integrate advanced air mobility into its infrastructure.
Oman
Oman is also actively pursuing the decarbonization of its transportation sector as part of its broader commitment to achieving net-zero carbon emissions by 2050. In November 2024, Oman launched the “Net Zero 3” initiative under its National Net Zero Programme. This plan encompasses 36 projects specifically targeting the transportation sector. The initiative aims for a 3% reduction in transportation-related emissions by 2030 and an additional 34% reduction by 2040. The transportation sector is a significant contributor to the country’s greenhouse gas emissions, accounting for approximately 18% of Oman’s total emissions in 2021, with passenger cars making up about 60% of that figure.
The government is incentivizing electric vehicle adoption through tax reductions, subsidies, and the development of charging infrastructure. Efforts are also underway to transition the public sector fleet to electric vehicles, setting a precedent for broader market acceptance.
Oman is developing a green hydrogen industry and is considering the use of hydrogen as a sustainable alternative for heavy-duty transportation. It is also exploring production and use of biofuels derived from local organic sources to reduce dependence on fossil fuels and support local industries.
Despite these initiatives, Oman faces challenges, such as the prevalence of fuel subsidies, which tend to encourage high consumption.
China as a Model
China serves as an example of successful electric vehicle penetration, driven by lower electricity costs and extensive charging infrastructure. Yao Li, CEO of the SIA Energy consultancy, said in a presentation to the IEA-IEF-OPEC Symposium in Riyadh February 19 that apparent demand for diesel reached a plateau in 2023 and for gasoline in 2024. This year, penetration of electric vehicles and plug-in hybrids will reach close to 60% of new vehicle sales in China, she said.
There are commercial drivers for the growth in electric vehicle penetration. In China, the price of electricity is significantly lower than the price of gasoline, so the cost of driving an internal combustion engine car is three times more expensive, which is not surprising given that China leads in installed renewable energy capacity as well as that of coal. China has also invested in modern charging stations and advanced battery technology. It has 13 million charging stations compared to 750,000 across the European Union and just 65,000 in the United States. Battery life has been extended to 10 years, and it takes just 10 minutes to charge an electric vehicle for around a 300-mile drive, she explained.
Driving Forward
While the Gulf Arab states are making significant strides toward electrifying transportation and reducing emissions, the journey is fraught with challenges. Massive investments in infrastructure, policy support, and technological advancements are needed to achieve their goals.
