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Emirates Playing Catch-up in EV Race
A Tesla Supercharger near the high-tech, carbon-neutral Masdar City district of Abu Dhabi, UAE.

Emirates Playing Catch-up in EV Race

By Simon Johns - Jan 15, 2021
Lubes’n’Greases Exclusive by Simon Johns

Electric vehicle sales have been rising rapidly in the more affluent parts of the West and East, driven by environmentally aware consumers and state incentives. But the Gulf, where there is plenty of wealth and proactive governments, has a long way to go.

Despite the government's attempts to stimulate growth, the EV revolution looks unlikely to take off in the United Arab Emirates as rapidly as it has in the West and further east in Asia. Cheap fuel and a small market have dissuaded automakers from investing marketing budgets in the region, while high purchase costs and a lack of incentives have dampened public interest in buying electrified vehicles, according to an automotive consultant based in Spain.

Historically, gasoline in the Middle East has been cheap, reducing the need for fuel-efficient vehicles based on running costs alone. This has focused manufacturers’ interests on countries where electric vehicles make more economic sense, such as Europe and North America, Jorge Bialade told Lubes’n’Greases.

With a population of almost 10 million, Bialade argues that the U.A.E. market is too small for original equipment manufacturers to bother with.

“The U.A.E. may be at the forefront electrification but ... it’s really not sexy enough,” Bialade said. “From the manufacturers point of view you, why would Audi invest in the Middle East when they won’t get the volume and their vehicles won’t be competitive when it comes to the price point?”

Limited Options

The side effect of OEMs sticking with tried and trusted internal combustion engines in the Gulf is a narrower range of available electrified models than other developed markets. The Tesla range, the Chevy Bolt, Audi’s e-tron, the BMW i3, a few Toyota hybrids and some Chinese brands are on offer. 

“It’s a chicken-and-egg situation. People need choice, and for manufacturers to bring choice they need people buying them,” Bialade said.

According to a survey of GCC countries carried out by YallaMotors, a little more than 16% of respondents own or have owned either a hybrid or a battery EV, while 61% said they would consider an electric car as a primary vehicle. In Norway, a country with half the population, 50% of cars are plug-ins. 

“Only recently, distributors started giving EVs the attention and marketing they need,” Anas Kiblawi, product manager for Dubai-based auto trade website YallaMotors, toldLubes’n’Greases. 

If an Emirati does decide to take the EV plunge, there’s no lack of infrastructure. As Bialade pointed out, the U.A.E. has the best ratio of charging stations and EVs. Still, “it doesn’t make any sense whatsoever buying an electric vehicle in the Middle East because the initial cost of purchase is very expensive,” he said.

Lack of Incentives

On the buyers’ side, both Bialade and Kiblawi said governments in the region could do more to stimulate growth. Bialade thinks the state should play a larger role in promoting electrified vehicles, both BEVs and hybrids, and could offer the typical incentives found elsewhere.

“Another big push to boost EV penetration could come in the form of subsidies from the government as currently there is no benefit being provided to offset the high initial cost of purchase,” Kiblawi said. Indeed, 37% of respondents to the YallaMotors survey blamed the high purchase price for not buying an electrified vehicle.

When a burly gasoline engine Toyota Land Cruiser in the U.A.E. costs half of what it does in parts of Europe, and when gas in the U.A.E. is U.S. $0.50 per liter compared with $1.70 in Norway, there doesn’t seem a great deal of incentive for Emiratis to buy one.

EV suppliers would be more attracted to the Middle East if all GCC members promoted vehicle electrification, creating a joint market of 50 million to 60 million people, Bialade suggested. That is still smaller than the United Kingdom, a key auto market. 

Finally, even though there is a high ratio of charging points per vehicle, those points are mainly found in malls and on highways, making them inconvenient for those who do not have one installed at their home or workplace. Kiblawi said the rate of growth can be sped up by adding more chargers in residential areas, reflecting the perception of 36.6% of survey respondents who said inconvenient charging put them off.

That makes hybrids a likelier proposition than BEVs, Kiblawi said.

“Initially, hybrids are likely to attract more buyers since they are easier to use and live with and combine the benefits of an EV with the convenience of a petrol-powered car. Having said that, there are also more hybrids available in the market than full EVs, giving us more reason to believe that hybrids have a better chance of capturing the market first,” he said.

Upward Trend

From a slow start, the U.A.E. is at least heading in the right direction, as the number of electrified vehicles edges up. In early 2018, the government set a target of 42,000 electrified vehicles on the Emirates’ roads by 2030, accounting for about 10% of the passenger car fleet. In 2020, there were around 4,000. 

Dubai is also pushing for 50% of its taxi fleet to be electrified by next year and has offered early adopters of electric vehicles free parking, no road tolls, discounted registration fees and free charging at the emirate’s 200 charging stations.

The Masdar Initiative in Abu Dhabi – a quadrant of the city powered by renewables and traversed in zero- or low-emission vehicles – has shown that EVs are viable in the desert heat.

As to whether the electrification of mass transit will stimulate sales of private EVs, Kilblawi thinks it debatable. And while electrifying public transport will expose more people to EVs in their daily lives, the benefits are likely to be weighted toward the environment, he explained. 

For the moment, automotive lube blenders in the U.A.E. and those supplying the country from outside can breathe easily that at least one region in the world is likely to be a consumer of their products for a good while longer.