The Middle East is undergoing a significant economic transformation, shifting from a reliance on oil revenues to investments in future-facing industries. Among these, battery manufacturing has emerged as a strategic priority, particularly in Saudi Arabia and the UAE, where gigafactory projects are being developed to support electric vehicle production and renewable energy storage. These initiatives align with broader national visions aimed at economic diversification, technological leadership, and sustainability.
Saudi Arabia has positioned itself as a key player in the battery manufacturing sector through partnerships with global automotive and energy storage companies. The country’s Public Investment Fund has taken a majority stake in Lucid Motors, an electric vehicle manufacturer, and plans to establish a Lucid assembly plant in King Abdullah Economic City. This facility is expected to include battery production capabilities to supply both local and export markets. The Saudi government has also engaged with Hyundai to explore joint ventures in EV and battery manufacturing, leveraging the country’s low-cost energy and strategic location to attract foreign investment.
The UAE, particularly through Abu Dhabi’s industrial hub, is advancing its own battery manufacturing ambitions. The emirate has partnered with several technology providers to develop localized production of lithium-ion cells, targeting both automotive and stationary storage applications. The UAE’s focus on renewable energy, particularly solar power, creates a natural synergy for battery storage solutions, ensuring demand for domestically produced batteries beyond the automotive sector.
Both nations benefit from access to cheap energy, a critical factor in battery production, which is energy-intensive. Saudi Arabia’s vast solar potential and the UAE’s existing solar infrastructure provide opportunities to power gigafactories with renewable energy, reducing the carbon footprint of battery manufacturing—a key consideration for global automakers under pressure to decarbonize their supply chains.
The Middle East’s entry into battery manufacturing is not without challenges. While the region has capital and energy advantages, it lacks an established supply chain for battery materials, relying heavily on imports of lithium, cobalt, and nickel. To mitigate this, Saudi Arabia is exploring investments in overseas mining assets and local processing facilities to secure raw material supplies. The UAE, meanwhile, is focusing on recycling technologies to create a circular economy for battery materials, reducing dependence on imports.
Another challenge is the need for skilled labor. Battery manufacturing requires specialized expertise in electrochemistry, automation, and quality control—areas where the Middle East has limited local talent. To address this, both Saudi Arabia and the UAE are investing in technical education programs and forming partnerships with international firms to facilitate knowledge transfer.
The competitive landscape of battery gigafactories is intensifying globally, with established players in China, Europe, and North America dominating production. However, the Middle East’s strategic location between major markets in Asia, Europe, and Africa offers logistical advantages for export-oriented manufacturing. Additionally, regional demand for electric vehicles and energy storage is expected to grow, driven by government incentives and urbanization trends.
Saudi Arabia’s Vision 2030 and the UAE’s Energy Strategy 2050 provide policy frameworks that support battery manufacturing through subsidies, tax incentives, and infrastructure development. These initiatives are designed to attract foreign direct investment while fostering local industrial capabilities. The success of these efforts will depend on sustained government commitment and the ability to integrate battery production into broader industrial ecosystems, including renewable energy projects and EV manufacturing.
The Middle East’s gigafactory investments are still in early stages compared to global leaders, but the region’s financial resources and long-term planning suggest a growing role in the battery industry. If executed effectively, these projects could position Saudi Arabia and the UAE as key suppliers in the global energy transition, reducing their economic dependence on oil while contributing to cleaner energy technologies.
As the global battery market evolves, Middle Eastern gigafactories will need to adapt to technological advancements, such as solid-state batteries or sodium-ion alternatives, to remain competitive. The region’s ability to leverage its energy advantages while addressing supply chain and workforce challenges will determine its long-term success in this sector. With strong government backing and strategic partnerships, the Middle East is poised to become a notable player in the battery manufacturing landscape.