In a significant move for the electric vehicle (EV) sector, Tesla Inc, the American battery electric vehicle manufacturer, has officially launched its sales operations in the oil-rich kingdom of Saudi Arabia. This move is particularly noteworthy as it pits the renowned EV maker against established competitors such as Lucid Motors, another US-based manufacturer, and BYD, a prominent player from China. The Saudi Arabian automotive market is traditionally dominated by large, petrol-driven SUVs, making this endeavor a bold step into a landscape characterized by considerable resistance to electric alternatives.

Tesla has opened several sales outlets in key cities, including Riyadh, Jeddah, and Dammam. These locations were strategically chosen as they align with the companys goal to replicate the relative success it has experienced in neighboring markets like the United Arab Emirates (UAE). In the UAE, Tesla has gained traction among a growing segment of urban buyers who are increasingly interested in sustainable transportation solutions.

The timing of Tesla's entry into the Saudi market comes at a challenging moment for the manufacturer, as global sales have experienced a decline in various markets recently. This downturn has been attributed in part to controversies surrounding the companys owner, Elon Musk, particularly his close ties to newly-elected US President Donald Trump. According to recent reports, Teslas global sales plummeted by 13% year-on-year, totaling 336,681 units in the first quarter of 2025. This decline included a substantial 9% drop in sales within the United States, which accounted for 128,100 units. Additionally, Tesla's share price has suffered considerably, nearly halving since Trumps election victory in November.

Naseem Akbarzada, who serves as Teslas country manager for Saudi Arabia, expressed his enthusiasm about the new venture during a press conference. Today we are proud to officially launch in the kingdom, marking the start of a long-term presence in the country, he stated, reflecting the companys commitment to establishing itself in this new market.

To support its expanding customer base, Tesla is also planning to develop a network of charging stations within the cities that house its sales outlets. However, it faces a significant challenge in the form of limited charging infrastructure along the country's vast desert inter-city highways, which could pose a hurdle for potential EV buyers.

Economist Mohammed Al-Qahtani has welcomed Tesla's entry but has called for more substantial investment in local production capabilities. We do not want a showroom; we want a factory. We want to be part of the production process, not just consumption, he emphasized, reflecting the aspirations of many in Saudi Arabia for greater local manufacturing that could contribute to the economy.

This expansion into Saudi Arabia aligns with Teslas broader vision of promoting electric vehicles globally, as the company seeks to carve a niche in markets that are traditionally focused on fossil fuel consumption. The company aims not only to sell vehicles but also to inspire a shift towards sustainable modes of transport in an oil-rich nation.

This story originally appeared on Just Auto, a brand owned by GlobalData.