With the UAW strike guaranteed to make Tesla an indomitable force on its home ground, key markets across the globe are now clearly seeing the writing on the proverbial wall, as illustrated by the fact that both Turkey and Saudi Arabia have approached Tesla over the past few hours to set up a manufacturing footprint within their respective territories.
Tesla, Saudi Arabia in Early Talks for Vehicle Factory--Sources -- WSJ
Saudi Sovereign Wealth-Fund Approached Tesla in Recent Weeks --Sources -- WSJ
Saudi Has Touted Access to Metals From Countries Including Democratic Republic of Congo--Sources -- WSJ$TSLA…
— *Walter Bloomberg (@DeItaone) September 18, 2023
As per the reporting by the Wall Street Journal, Tesla and Saudi Arabia are currently engaged in preliminary talks over setting up an electric vehicle manufacturing plant within the Kingdom, with the Saudi PIF acting as a key intermediary for the talks. The Kingdom has reportedly offered Tesla preferential access to metallic ores and minerals that are essential for manufacturing EVs. This inducement has been made possible by the fact that the Saudis are already negotiating with the government of the Democratic Republic of Congo (DRC) to purchase vast troves of the country's mineral assets. Bear in mind that the DRC supplies 70 percent of the world's demand for cobalt.
As per the intricate discussions that are reportedly taking place behind the scenes, the Saudis are considering the injection of new capital in a distressed cobalt and copper mining project within the DRC. The new funding would be routed through the commodities trading giant Trafigura, with Tesla gaining preferential access to the project's cobalt and copper supplies in return for establishing a sizable manufacturing footprint within the Kingdom.
Of course, Turkish President Recep Tayyip Erdogan also urged Tesla recently to establish a Turkish Giga Factory. The exhortation reportedly came during a meeting between Erdogan and Elon Musk on the sidelines of the ongoing UN General Assembly session in New York.
Lucid $LCID seeing this headline pic.twitter.com/4knDIio3no
— Evan (@StockMKTNewz) September 18, 2023
Meanwhile, Lucid Group is sure to see these fast-paced developments with apprehension. For the benefit of those who might not be aware, Saudi Arabia has already awarded incentives of around $3 billion to Lucid Group to establish its AMP-2 facility in the King Abdullah Economic City (KAEC) near Jeddah. The Saudis have also signed an agreement to purchase up to 50,000 electric vehicles from the company over the next ten years, with an option to double the quantum of this initial order.
Lucid Group’s assembly plant within the confines of its gigantic AMP-2 facility in KAEC went live in September 2023. The company currently ships all pertinent parts for the Air EV from its AMP-1 facility in Arizona, with the final assembly taking place in Jeddah. Lucid Group plans to ramp up the annual production capacity of its AMP-2 facility to 150,000 units by 2026. However, the EV player has consistently struggled to ramp up its production footprint, with the company managing to produce only 2,173 vehicles in the second quarter of 2023, registering deliveries of just 1,404 EVs during the period.
"Any wage increase further advances Tesla’s already tremendous cost advantage in EVs over its older U.S. peers, which are contending with generations of legacy expenses while trying to steer a costly transition to electric from gas-powered vehicles." https://t.co/8NLlungrPb
— James Pethokoukis (@JimPethokoukis) September 16, 2023
Finally, as stated earlier, the ongoing UAW strike at GM, Ford, and Stellantis has already crowned Tesla the reigning champion of North America, regardless of the outcome of the strike. In every feasible scenario, the cost of production of Tesla's competitors is almost guaranteed to increase, further eroding their competitiveness vis-a-vis the EV giant.
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