Tesla Enters Saudi Market Amid Repaired Musk Relations

Tesla has announced plans to launch sales operations in Saudi Arabia next month, signaling a significant thaw in relations between CEO Elon Musk and the oil-rich kingdom after years of tension. The electric vehicle manufacturer will begin its market entry with an April 10 launch event in Riyadh, followed by pop-up stores in major cities including Jeddah and Dammam.

According to Yahoo Finance, this development marks a dramatic reversal in the relationship between Musk and Saudi Arabia’s leadership, particularly the Public Investment Fund (PIF) headed by Yasir al-Rumayyan. The relationship had deteriorated following Musk’s controversial 2018 tweet about taking Tesla private with “funding secured” after meetings with Saudi investors.

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Market Dynamics and Competition

Tesla enters a challenging market where electric vehicles currently represent just 1% of total car sales, according to a 2024 report from consultants PwC. The Saudi automotive landscape remains dominated by large gas-guzzling vehicles, supported by the country’s low fuel prices and limited EV charging infrastructure across its vast desert roads.

The company will face competition from established EV players already operating in the kingdom, including China’s BYD and Lucid Motors – the latter receiving over $1 billion in investment from the PIF after the rift with Musk became public. Saudi Arabia has also invested in Ceer, a domestic EV brand still in development.

Despite these challenges, Tesla’s expansion aligns with Saudi Arabia’s broader economic diversification goals under Vision 2030, which includes reducing dependence on oil revenues and developing technology-focused sectors.

NEWS: Tesla is officially launching in Saudi Arabia on April 10th. pic.twitter.com/1h6a1P8eVy
— Sawyer Merritt (@SawyerMerritt) March 25, 2025

Political Dimensions

The timing of Tesla’s Saudi expansion coincides with Musk’s elevated political profile in the United States. His support for President Donald Trump’s election campaign and subsequent administration appointment has apparently smoothed relations with Saudi leadership, with whom Trump maintains close ties.

Earlier this year, Trump reportedly asked Saudi Arabia to invest upwards of $1 trillion in the U.S. economy over four years. The president also announced plans to make Saudi Arabia his first foreign destination since returning to office.

The political alignment was visibly demonstrated last November when Musk appeared alongside al-Rumayyan and Trump at a UFC mixed martial arts event in New York, one of the first public signs of improving relations.

Historical Context

The rift between Musk and Saudi investors dates back to 2018, when the Tesla CEO tweeted about securing Saudi funding to take Tesla private at $420 per share. When the deal failed to materialize, investors sued Musk for securities fraud, a case that ultimately exposed tense exchanges between Musk and al-Rumayyan.

“You are throwing me under the bus,” Musk wrote in a text to Rumayyan, according to court documents revealed during the trial. A U.S. jury eventually found in 2023 that Musk was not liable for misleading investors.

Prior to this announcement, Saudi Arabia had established itself as a significant Twitter investor. Al Jazeera reported that the Kingdom Holding Company (KHC) and the private office of Prince Alwaleed bin Talal maintained their Twitter shares valued at $1.89 billion after Musk’s takeover, making them jointly the second-largest investors in the platform.

Business Strategy

Tesla’s Saudi expansion comes at a challenging time for the company globally. European sales have declined 42.6% so far this year despite rising overall EV demand in the region. In the United States, the company has faced protests over Musk’s role leading the Department of Government Efficiency, which has implemented significant federal workforce reductions.

The April 10 launch event will showcase not only Tesla’s electric vehicles but also its solar energy products, autonomous driving technology, and robotics. “Experience the future of autonomous driving with Cybercab, and meet Optimus, our humanoid robot, as we showcase what’s next in AI and robotics,” the company stated on its website.

Tesla has indicated it plans further investment in Saudi Arabia starting in 2025, though specific details about local manufacturing or infrastructure development remain unannounced.

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