EV startup Lucid Motors has just got an operating license. This brings permission to start EV production in one of Saudi Arabia’s special economic zones. Notably, Saudi Arabia initiated four new Special Economic Zones (SEZs) in April. This is designed to take advantage of growth in key sectors including electric vehicles, manufacturing, cloud computing, medical tech, and more.
These economic zones are scattered with great planning throughout the Kingdom. The same offers foreign investors the opportunity to invest with special incentives. Some of its kind may comprise lower corporate tax rates and tax-free imports of machinery and raw materials. Alongside, 100% foreign ownership, easy set-up, and labor flexibility.
In addition, the King Abdullah Economic City (KAEC), where Lucid obtained approval to begin EV production, is located on the Red Sea. Since 13% of global trade passes through the Red Sea. Therefore, it significantly offers a solid location in order to establish a global supply chain network.
As per the special economic incentives, the KAEC includes a 5% corporate income tax which is up to 20 years. This is followed by the 0% customs duties deferral for goods inside the SEZ, 0% value-added tax on goods traded within the zone and other SEZs, and much more.
Lucid is ready for production in Saudi Arabia
Additionally, Lucid is viewed as a major investor in the economic zone. This is expected to produce 150,000 EVs annually in Saudi’s economic megacity. Also, the construction on the facility was already set to begin last May. Whereby, the automaker plans to re-assemble Air electric sedan models pre-built at its Casa Grande, Arizona facility. On the other hand, mass production is predicted to begin next year.
It seems that the permit approval came into existence as Saudi thought to diversify its economy with peak oil approaching. Alternatively, part of the Kingdom’s “Saudi Vision 2030” consists of raising the share of non-oil GDP from 16% to 50% by the end of the decade respectively.
