Tesla is reportedly in early-stage talks with Saudi Arabia to secure a deal for the purchase of metals and minerals needed for its electric vehicles (EVs). The kingdom is seeking to woo Tesla with the right to purchase quantities of these materials from countries such as the Democratic Republic of Congo (DRC), which supplies around 70% of the world’s cobalt. Saudi Arabia has approached the Congolese government to secure assets and has also considered extending financing to commodities-trading giant Trafigura for a cobalt and copper project in Congo that could supply a Tesla vehicle factory in the kingdom.
A partnership with Saudi Arabia could help Tesla reach its goal of selling 20 million vehicles annually by 2030. This deal comes with potential complications, given Tesla CEO Elon Musk’s contentious relationship with the Saudis and their existing partnership with Lucid Group, Tesla’s electric-vehicle rival. Lucid, majority-owned by the Saudi Public Investment Fund, is set to start vehicle reassembly this month at its first international plant in Saudi Arabia, with plans to produce 150,000 cars annually.
For Saudi Arabia, a tie-up with Tesla would attract foreign investment and support the kingdom’s efforts to access metals abroad, refine them domestically, and integrate them into its renewable energy ecosystem. The country is also in talks with the U.S. to secure metals in Africa for the energy transition. The negotiations between Saudi Arabia and Tesla were initiated by the kingdom’s sovereign-wealth fund, and while the conversation is ongoing, there is still a possibility that Tesla may reject the proposal.
This potential deal with Saudi Arabia marks an interesting development considering the history between Musk and the Saudis. In 2018, the Saudi sovereign-wealth fund purchased $2 billion of Tesla shares, and PIF Chair Mohammed bin Salman discussed further investment with Musk. However, Musk faced legal challenges related to alleged fraudulent statements he made in 2018, which were settled, and Tesla’s share price surpassed the fund’s entry point, resulting in PIF selling their shares. Additionally, PIF invested $1 billion in Lucid on the condition that the company establishes a factory in Saudi Arabia.
Sources:
– The Wall Street Journal