RIYADH: As supply chain challenges loom across all sectors of businesses, industry experts have warned these hurdles may impact the transition to electric vehicles despite a global drive towards a sustainable future.
The shortage of microchips amid rising demand for EVs has exacerbated the problems many manufacturers and suppliers have been facing since the pandemic hit in 2020.
This, coupled with the geopolitical tensions in Eastern Europe, is steering the EV business backward, as the industry demands more joint ventures to boost the refining of battery raw materials to ensure their availability.
“Achieving global EV transition targets — set for 2030 in many countries — will be impacted as manufacturers struggle to source raw materials and keep up with rising demand,” said Majida Al-Azazi, chairwoman of Dubai-based M Glory Holding, which owns the first industrial facility in the UAE that manufactures EVs.
"We will achieve a lot by 2030. However, 2050 may be a more realistic target for a hundred percent transition," she added while speaking during a panel discussion at GITEX Global in Dubai on Oct.12, according to MEED.
Faisal Sultan, managing director of US-headquartered Lucid Motors — which is backed by Saudi Arabia’s Public Investment Fund, said the pandemic has highlighted the critical role of logistics for industries worldwide.
Calling logistics the lifeline for any industry, Sultan said: “The lesson learned is that you need to localize. Not everything can be localized, but core competencies can be. The more you keep in-house, the more successful you are bound to be.”
In August, Sultan told Bloomberg TV the PIF backed the firm when it faced a supply crunch which led to two production target cuts.
“The PIF has been very supportive. When the world re-emerges from the pandemic and the supply chain catches up, we will be ready,” said Sultan.
Earlier in October, Bloomberg reported that Australia-based lithium producer Pilbara Minerals is seizing on a current rush by automakers to secure future supplies of battery materials to ensure a sufficient supply of raw materials.
“If you believe the supply-demand outlook, there’s going to be a shortage, and the car companies who haven’t secured the supply chain are going to have a problem,” said Dale Henderson, CEO of Pilbara Minerals.
Rakesh Nair, managing director of Stellantis Middle East, a Netherlands-headquartered automaker, said that the challenge of keeping up with demand had been now exacerbated for EV manufacturers and their suppliers.
“When COVID-19 hit in 2020, it hit the brakes on virtually every supply point. But now, we don’t have the same speed to go back to where we were before,” he said, adding that demand is peaking, but manufacturers need time to bounce back as they recover their losses.
According to Nair, the shortage of microchips is affecting both EV manufacturers and traditional automakers.
“We’re reducing the use of mechanical parts at a very high rate, and it is equally important to get the parts we need to our factories as quickly as possible,” Nair further noted.
Apart from supply chain issues, the EV sector is also facing inconsistent regulations and charging infrastructure, along with reluctance among end-users, said Al-Azizi as reported by MEED.
“Without the government’s support, manufacturers cannot succeed. Dubai and Abu Dhabi are doing a lot in this space, which helps tackle the infrastructure and awareness challenge,” she added.
Earlier in June, during an exclusive interview with Arab News, Kalyana Sivagnanam, group CEO of Petromin, said that the company will open several EV charging stations across the Kingdom, as the company aims to kick-start confidence in customers’ minds.
