G. Key challenges in pursuing this e-mobility pathway

Progression on this pathway to an Arab region e-mobility future faces some key challenges that are foreshadowed in the preceding narrative.

1. Financing of public transportation and urban redevelopment projects

Building public transportation infrastructure is costly in the Arab region as it is in other parts of the world. It is promising to see the level of commitment to such projects in many countries of the region. Saudi Arabia, the United Arab Emirates and Iraq each have project pipelines of between $50 billion and $60 billion. There is a total of more than $50 billion in high-speed rail projects across the region as a whole. As described above (and in other sections of this report), the majority of ongoing and planned projects are for electric-powered public transport. While it will be easier to devote funding to such projects in the GCC countries, other countries in the region face financial difficulties in building what is needed to move to an e-mobility public transit future. As Abduljabbar Mohammed notes, “streets can be re-imagined and humanized to accommodate micro-mobility devices. However, this needs a national strategy and a lot of money to be invested”. Sources of funding will need to be explored including private sector investment, and funding support from multilateral development banks, other international development and climate finance institutions. Projects that focus on integrating public transportation options with micro-mobility and MaaS as described above will not necessarily be more costly than projects that do not, but the increased number of interests and parties involved could be complicating factors in securing and overseeing funding.

In many Arab region cities, informal transport is the most common and widely used form of urban transit. Where regular public transport is inadequate or limited or both, small-scale operators, in some contexts legally and others illegally, enter the market to fill these gaps with passenger vans, microbuses, etc. The vehicles serving this “transit gap” largely run on diesel and lack emission control technologies and filters, generating very large CO2 emissions and other pollutants. The informal transport providers are an extant hybrid form of micro-mobility and public transport in the Arab region, but one that will be difficult to integrate into the e-mobility pathway outlined here. The nature of their independent single-operator business model does not benefit from economies of scale and does not generate enough revenue to invest in innovation like purchasing new EVs. Additionally, informal transport operators represent a significant share of the workforce in a number of Arab countries. Attempts to limit them through stricter regulations or competition from subsidized clean-power modes risks implementing this e-mobility model at the expense of the social good of those making a living in this sector. Innovative financial incentives and other measures will be important to integrate the current informal sector into a “small end, big end” e-mobility future.

3. Feasibility of these mobility modes in rural and peri-urban areas

Rural areas in the Arab region have long experienced mobility deficits. They largely lack public transport networks, have less funding than urban areas to devote to providing mobility to the population, and have less robust governance and institutional capacity to oversee service provision. Comprising approximately a quarter of the population, rural areas are at the centre of mobility equity concerns in the region. As the International Association of Public Transport notes, solving for rural mobility could “unlock equity potential – good rural road infrastructure and services drive agriculture, commerce, trade, industry, and allow populations to access opportunities such as education, jobs, health, culture and social activities. It is no wonder that rural transport plays a critical role in achieving no less than half of the SDGs”. But the traditional models of urban public transport do not transfer to rural settings – for example, it is uneconomical to run regular bus routes through areas where demand is low and route timing is difficult to match to population needs. The e-micro-mobility and MaaS models as they are being developed for urban settings will need adaptation to rural areas, given for example much lower 4G network coverage for coordinating rides. Electricity in these areas also poses a challenge to any form of e-mobility.

4. Impact of the importation of used ICE vehicles to the region

The global export of used ICE cars and other light duty vehicles (vans, pickup trucks, SUVs) has risen significantly over the last decade – from 3.4 million in 2015 to nearly 5 million in 2019. Between 2015 and 2020, a total of 23 million used cars were exported, overwhelmingly ICE vehicles. And this continues to rise as EV take-up rises around the world. Two thirds of used car exports go to the developing world, including to the Arab region. Estimates range between 25 and 40 per cent go to countries in Africa (considering both North and sub-Saharan Africa), and the Middle East represents about 10 per cent. Within the Middle East part of the Arab region, the United Arab Emirates is the main importer with almost 70 per cent (many for re-export, largely to other Arab countries). On the one hand, the easy availability of generally very low-cost used ICE cars hinders market growth for EVs in the region and strongly disincentivizes greater use of public transport, micro-mobility and MaaS. From an equity standpoint, the cost of purchasing electric two- and three-wheelers can be comparable to or cost less than used ICE cars (and use of them on a rental or share basis in MaaS models is even more economical). But promoting the “big end, small end” e-mobility pathway over the purchase of used cars will require greater public awareness and government policy actions potentially including ICE car import limits or bans and micro-mobility purchase incentives.

Develop a national sustainable urban mobility policy in each country of the region, with capacity-building support as needed, to shift car drivers to more efficient and non-carbon producing forms of transportation

Several models have been developed, and implemented around the world, for national frameworks of integrated policies to promote and scale sustainable urban mobility. Decision makers of the transport, energy, environment and planning ministries of Arab countries should review these models, confer with peers in countries that have employed them and create a national sustainable urban mobility policy (NUMP/SUMP) for their country. Such plans are developed by national Governments to enhance the technical, financial, regulatory and other capabilities of cities to plan, finance and create integrated sustainable mobility systems. They generally focus as an early priority on infrastructure development required for EVs and other sustainable mobility modes, before creating incentives for EVs. This is important because overcoming the largest barriers to EV adoption first is essential. One of the NUMP/SUMP models available for Arab country decision makers to consider is a set of principles and a structured four-phase, fifteen-step process developed by the MobiliseYourCity Partnership, an international transport initiative under the United Nations Marrakech Partnership for Global Climate Action, launched at COP21 in Paris in 2015. This model has been adopted and implemented in more than 15 countries in Europe, North and South America and Asia. Another model has been developed by the United Nations Human Settlements Programme (UN-Habitat) in Kosovo, and another developed with the support of UNDP and implemented in Georgia. The plans that Arab countries develop should be underpinned, as the MobiliseYourCity model emphasizes, by a principle of “national appropriateness”, i.e. recognizing that conditions differ across the four country groupings and ensuring that each plan is tailormade to circumstances in that country. NUMP/SUMP planning in the Arab region should consider encompassing the regulation and enablement of all land mobility modes, services and providers, including all public transport systems and MaaS providers in a city, under a single ministerial or departmental entity. Attention should be given in this sustainable urban land mobility planning to the potential for integrating other modes of transport in the future, such as river and marine transport, aerial drones and air taxis, etc.

Set national targets for procuring electric buses by 2025 and 2030

Arab countries including Bahrain, Saudi Arabia, and the United Arab Emirates have formal targets for net-zero carbon emissions. Almost every country in the region has specific renewable energy targets and emissions reductions targets, for example Emirati pledges for 50 per cent clean energy in its total energy mix and a 70 per cent reduction in CO2 emissions, both by 2050. Few have declared targets specifically for e-mobility. An important place to start is targets for electric buses. Setting targets to have minimum numbers of e-buses in countries’ public transportation systems, or to procure only e-buses after certain dates, will be important demand signals to suppliers, operators and capital providers. This will spur investment by e-bus manufacturers and accelerate e-bus cost competitiveness against ICE buses.

Establish policies or legislation that enable transport systems at state and municipal levels to use innovative procurement models for e-buses and rail

Traditional procurement models in public transportation systems make the higher upfront cost of electric buses a barrier to adoption. A variety of new procurement models for e-buses have emerged that are based on total cost of ownership (TCO) over time and on innovative partnerships between cities and bus suppliers. One example is separating ownership of buses from their operation and maintenance to help offload capital expenditure from the public to the private sector. Leasing contracts help secure the buses in the system until the financial obligations are paid, which helps reduce payment risks and lower credit rates and funding costs. Santiago, Chile has had success with this model, leveraging procurement regulations that allowed it. Other examples of innovative e-bus procurement models to build into policy include environmental costs in tender evaluations, and upfront bus purchase with batteries leased out of operational funds. In countries where national level regulations forbid or complicate such models, these regulations should be removed. Procurement models and regulations for public rail transportation systems should also be examined for how they might complicate or bias against deployment of electric-powered systems and revised accordingly.

Provide grants, loans and/or subsidies from appropriate levels of government and aid agencies, and explore multilateral development bank funding, for urban redevelopment projects and other projects that purposefully integrate public transportation, electric micro-mobility and MaaS

Depending on the country, urban redevelopment planning, financing and project implementation is conducted at the national, sub-region or city level. At whatever level these decisions are made, new forms of finance and funding should be made available on a prioritized basis for projects that are purposefully designed to integrate the “big end” (e-buses and electric rail systems) and “small end” (e-micro-mobility and MaaS using EVs). Such infrastructure development and use-of-space redesign projects would prioritize objectives like: parking and charging for e-bikes and e-scooters (owned and shared) at transportation hubs such as train or bus stations and stops; street and road space reclamation to prioritize bikes, scooters and walking, especially near public transit hubs; locating bikes and scooters in underserved areas of cities; transit-oriented development that places housing, commerce, employment opportunities and services around public transportation hubs; and two- and three-wheel-only infrastructure that allows electric micro-mobility vehicles easier access to public transportation hubs by bypassing congested or dangerous intersections and enables other transit-to-destination shortcuts. Financing support should especially prioritize: cities that are suffering the greatest harmful effects on public health and economic growth from air quality and congestion; cities structuring joint e-bus purchasing arrangements with other cities to increase economies of scale and reduce upfront costs; and cities seeking to make full fleet replacements of ICE buses with e-buses.

Establish national and regional standards requiring interoperability in charging infrastructure, especially for charging points deployed for public transit systems

Building out charging stations for EVs of all types will be a priority in the Arab region as it is globally, and interoperable (versus proprietary) systems will be an important contributor to promoting EV adoption. Mandating interoperability for the infrastructure powering EVs in Arab countries will be essential to scaling the adoption of e-mobility. Ideally, common standards for interoperable charging should be adopted region wide, enabling individual EV owners and long-distance public transportation systems to cross borders without concern about power availability or trip range limitations. This will also be important when electric medium-duty and heavy-duty cargo trucks become more a part of the e-mobility picture in the region. In prioritizing e-mobility in public transportation, it will be especially important to mandate common/interoperable charging technology for e-buses in cities’ transit system fleets. The ability to accommodate multiple plug interfaces and charging technologies will protect public transit systems from becoming locked into any single manufacturer; reduce financial and technological risk for cities; and ensure maximum flexibility and competitiveness in procurements for future subsequent fleet additions or upgrades.

Set ICE vehicle phaseout deadline mandates that cover all buses and other vehicles in the public transportation sector

To date, 17 countries around the world as well as several provincial and state governments have set ICE vehicle phase-out target dates, but no Arab country has. Of those which have declared their ICE phase-out targets, only a few have included vehicle segments such as vans, light commercial trucks and medium- and heavy-duty vehicles, and only the Netherlands, Hainan province (China) and Cape Verde have specifically included buses. Arab countries should establish their target dates and define the scope of the future bans to include all public transportation vehicles and medium- and heavy-duty cargo trucks. These bans will accelerate the market viability of such heavy vehicles by stimulating manufacturer demand to develop them sooner. Where possible, financial and other incentives should be employed to encourage owners to accelerate the replacement of their ICE vehicles and get the legacy stock off the country’s roads. This should prioritize public transport vehicles, but also include owners of cargo fleets, corporate fleets and personal vehicles. In setting these targets, countries in the region should also develop plans to manage the elimination of ICE vehicles that are put out of service in an efficient and optimal manner, within the context of the “circular economy”, focusing on reducing waste to a minimum and making optimal use of recyclables. In addition to the environmental benefits, doing so can create new employment, manufacturing and other opportunities in the ICE vehicle recycling sphere.

Implement vehicle tax and vehicle insurance rationalization to promote electric two- and three-wheel vehicle sales and usage

Countries in the Arab region could adapt models employed in other countries for using tax rates to influence the share of two-wheel and three-wheel EVs in the mobility mix. Importation duties, sales or excise taxes, annual licensing and registration fees and other taxes and fees could be raised on ICE cars, and reduced to very low rates on smaller, lighter, efficient sustainable micro-mobility modes like two- and three-wheel EVs. In a similar manner, vehicle insurance rates could be adjusted to favour these lighter, lower-speed EVs on the basis of their lower negative externalities (risk of damage to other vehicles and people, CO2 emissions, other air pollution, etc.). Governments might consider covering universal basic insurance for two- and three-wheel EVs from surplus revenue generated from the higher tax levies on ICE vehicles of all types.

Develop national governance and policy frameworks for MaaS that regulators at lower levels can align with for uniformity

A common regulatory framework at the national level in each Arab country, and ideally across all the countries of the region, could create stable, competitively level market growth environments for current and future MaaS providers, while mandating their alignment with public good objectives that Governments establish related to sustainable mobility. Such frameworks could establish broad parameters applicable to all MaaS modes that lower-level regulators could work within for permitting, pricing mechanisms, use of public space, data security and privacy, requirements for integration of public transit systems into MaaS providers’ apps and more.

Provide financial and other support to impel informal transport sector operators to adopt electric vehicles and integrate with public transit MaaS systems

Options could encompass loans to buy new electric vans or microbuses or retrofit ICE vehicles with battery power; subsidized or no-cost provision of electric two- and three-wheelers; provision of the information technology required for operating within MaaS networks; new forms of income enabled by MaaS operators’ non-mobility revenue streams; pension plans or other forms of long-term income security; non-financial incentives like health or social insurance; and others. Incentivizing informal sector operators to integrate with electric-powered public transit, e-micro-mobility and MaaS ecosystems could also contribute to addressing mobility deficits in rural and peri-urban areas by expanding the potential for more demand-driven service.

A. E-mobility can play an important role in the diversification of Arab region economies

The Arab region is in strong need of economic development and diversification. Oil, gas and minerals have historically dominated and continue to dominate the exports and the government revenues of most countries of the region. Despite economic diversification efforts channelling oil and mineral revenues into other activities over the past decade and longer, the region remains highly dependent on these resources. While many countries produce goods and trade in services, they are primarily for domestic markets, with the principal industries being textiles, construction, cement, metals, chemicals, food processing, fertilizers, tourism and business services including banking and financial services.

1. The need for technology – and manufacturing-based Arab region economic diversification

The urgency of effective Arab region economic diversification is increasing. In the face of climate change, pollution and other driving forces, the global shift toward sustainability is having an accelerating downward effect on the prospects for oil and gas economies. Commitments and initiatives under the European Union’s Green Deal “foresee a reduction in oil imports by up to 25 per cent by 2030, and by 79 per cent in 2050 compared to 2015, [with] 90 per cent of energy needs being met by renewables by 2050”. While optimistic in the near-term, even the Organization of the Petroleum Exporting Countries (OPEC) projects global oil demand plateauing around 2035. Bloomberg projects oil demand specifically from road transport peaking globally in 2027 in a conservative scenario, with electric and fuel cell vehicles displacing 21 million barrels/day of oil demand by 2050. A faster transition to electric mobility would see the decline in oil demand accelerate, with nearly 50 million barrels/day displaced by 2050. One key to diversifying economies is for countries in the region to promote the development of sectors that produce a larger variety of goods with more complex forms of production, more private sector innovation and growth, exports with higher value-added and better integration with global value chains. Many in the region emphasize this in their near- and longer-term planning. Bahrain describes “rethinking its place in the global value chain and identifying new sources of future economic strength, driven by a thriving private sector”, and “attaining increasing levels of sophistication and innovation, particularly by expanding to knowledge-based sectors”. A key theme in mid-range planning by Kuwait is “growth through a combination of private sector development efforts, and diversification by developing a strong presence in a variety of industries”. The transformation in Saudi Arabia is already underway including major efforts to enhance local content in the production of goods and services. The Public Investment Fund (PIF) aims by the end of 2025 to create 1.8 million new jobs through a focus on thirteen vital and strategic sectors. Oman 2040 Vision describes “economic diversification with focus on technology, knowledge and innovation, reinforcing upstream and downstream integration among economic sectors to expand the production and export base, and deepening investment in high value-added sectors”. While facing different challenges in terms of their current conditions and their capacity to diversify, the middle-income countries, least-developed countries and countries experiencing conflict of the Arab region also recognize the need to move their economies into more technologically advanced industries and trading relationships. The Egyptian Vision 2030 includes a Knowledge, Innovation and Scientific Research pillar aimed at “ensuring the developmental value of knowledge and innovation and using their outputs to meet national objectives”. Targets include a six-fold increase in high-tech exports as a percentage of national exports by 2030. The Jordanian Vision 2025 describes “developing priority industry clusters and increasing their competitiveness to become successful exporters”, including information and communications technology (ICT), life sciences including biotechnology and renewable energy technology. The Iraqi 2030 Vision describes an intended “transformation in the economic base and the connection with the global economy” and “stimulating sectors with high added value, especially in industry and agriculture”.

2. Diversifying economies by developing e-mobility industrial supply chain capabilities

The automotive industry, as it transforms into a global mobility industry, can be strategic in the development of advanced industrial manufacturing and production capabilities in the Arab region. As described throughout this report, the future of the automotive industry is electric and highly digitalized, connected vehicles. Increased roles in the supply chain of these vehicles would not be a “silver bullet” for any Arab country’s diversification into a high-technology and advanced production economy. But it could be one valuable element in countries’ diversification models, if deliberately developed. It would be not distinct from, but rather part of, the larger strategies of the region’s countries to create new “green economies” rooted in the transition to renewable energy. Taking this path would help accelerate and scale the region’s own adoption of EVs as well as serve economic diversification aims. While growth projections are encouraging, currently the EV take-up in the Arab region lags well behind much of the rest of the world. One market analysis calculated the Middle East and African market valued at $35 million in 2020 and projected it to reach $84 million by 2026, representing a strong compound annual growth rate of over 15 per cent but from a low base. The International Energy Agency (IEA) estimated 10 million EVs in use globally in 2020, 3 million of which were sold that year, a rise of 40 per cent from 2019. In the Arab region today, the number of EVs is measured in thousands. Jordan leads with approximately 20,000 on its roads and streets. Global manufacturers of EVs are beginning to focus on the Arab market – for example, GM plans to introduce 13 EV models in the region by 2025. Stellantis has several EV models in the Middle East and North Africa market and plans to introduce others in the near future across its brand portfolio. Arab countries can potentially stimulate and serve local demand in part by developing industrial supply chain capacity and in doing so further stimulate the global manufacturers’ attention to the region.

3. A foundation exists for a robust Arab region role in the e-mobility value chain

The region’s role in the automotive and mobility industry is not only an aspirational future. There is already a significant foundation. Morocco is the clear leader in the Arab region’s automotive manufacturing, assembly and supply chain capacity, with a current production over 700,000 vehicles per year. The automotive industry is the country’s leading exporter, representing 25 per cent of Morocco’s total export, and it is projected to grow at an average annual rate of 17.5 per cent between 2020 and 2025. The move into e-mobility vehicle and component production is underway. French-Italian company STMicroelectronics is producing electronic chips for Renault EVs in Morocco, and the chip production augurs full EV manufacturing in Moroccan plants. In 2021, a collaboration between five technical institutions in Benguerir introduced a 100 per cent Moroccan production line for manufacturing charging stations for EVs, with an anticipated production capacity of 5,000 terminals per year. The automotive industry is important in Egypt, with annual output of over 70,000 vehicles. More than 80 manufacturers run more than 15 car assembly factories and 75 other facilities in the country, including GM, BMW, Hyundai, Toyota and Nissan. Egyptian industry has the capacity to produce 300,000 passenger cars, light commercial vehicles, trucks and buses per year. In an ongoing effort to localize automobile production, in December 2021 Egyptian officials initiated discussions with the Emirati company M Glory Holding for the manufacture of Egyptian-made cars with an Egyptian labour force. Egypt is also entering into the e-mobility industrial supply chain ecosystem. State-owned El Nasr Automotive Manufacturing is in talks with new prospective partners to continue a project originally intended to proceed with Chinese developers Dongfeng to begin producing EVs locally beginning in 2023, with annual output expected to be 20,000 e-vehicles by 2026. More than 50 per cent of these vehicles’ components will be manufactured locally, and an MoU with the Arab Organization for Industrialization outlines future joint-venture plans for EV production in Egypt. In February 2021, the Egyptian company Brightskies began a collaboration with the Engineering Automotive Manufacturing Company (EAMCO) to develop an electric bus prototype, together producing the bus, battery pack and powertrain electronic control unit. Foton Motor of China has also started manufacturing electric buses in Egypt, with a potential capacity of 500 buses per year with nearly 50 per cent locally produced components and charging infrastructure. In May 2022, the multinational automotive group Stellantis gained approval from the Egyptian Government to build a plant for the local manufacture of EVs, a $35 million project scheduled to be implemented by 2025. Plans indicate these EVs manufactured in Egypt will be exported to Algeria, Morocco, South Africa and several other African countries.

B. Automotive industry development is emerging in more countries of the Arab region

In other countries in the region, there is growing interest and effort to begin developing automotive manufacturing and supply chain industrial capacity. Egypt and Morocco are seeing others moving to enter into or grow in the automotive industry. It is anticipated that these efforts will grow as e-mobility advances in the Arab region and globally.

1. Saudi Arabia and the United Arab Emirates are making investments to compete in the global e-mobility sector

The United Arab Emirates is one example of a country looking to the automotive industry as an economic diversification priority, calling it an ideal long-term option for the Emirates’ industrialization strategy. Abu Dhabi is planning to develop an “Auto City” in the Mussafah district to encourage the development of new plants for manufacturing cars, accessories and spare parts. In the United Arab Emirates, M Glory Holding Group opened its first EV manufacturing plant in March 2022 in Dubai Industrial City, expected to be one of the largest in the region with 1,000 new jobs and making 55,000 EVs a year. The vehicles will be exported to other GCC countries as well as Egypt and four other countries in Africa. Omar Al Suwaidi, United Arab Emirates Undersecretary of Industry and Advanced Technology, has described the EV venture as part of efforts in three economic diversification programmes that all have the aim of making it a new “vital sector in the United Arab Emirates to develop new competitive advantages and consolidate the position of the United Arab Emirates as a hub for global companies, investments and talents”. Currently, two Dubai-based automakers, W Motors and Jannarelly Automotive, make only ICE “hyper performance” cars but Jannarelly is reported to be considering an electric version of its Design-1 vehicle. Dubai’s Jebel Ali Port in the Jebel Ali Free Trade Zone is an established major automotive logistics base. More than 530 vehicle and transport sector companies are operating in the zone including Mitsubishi, Volkswagen and GM. Some of these companies are looking at the possibility of establishing vehicle assembly operations in the Zone, and the CEO of port operator DP World has said “we’re nurturing the automotive trade and are geared for growth”. As part of its strategy for localizing manufacturing content across a range of industries, Saudi Arabia is aiming for half the production of currently imported vehicles to be domestic by 2030 – more than 500,000 vehicles per year and expected to grow annually. Developing the automotive sector is an initiative under the Saudi National Industrial Development and Logistics Program (NIDLP). Saudi Arabia Basic Industries Corporation (SABIC) has worked with automobile manufacturers including Hyundai, Volkswagen and Mitsubishi, and the country has several spare parts factories because of demand for replacement parts. Securing a deal with a major automaker for a car plant was a target to be achieved by the end of 2020, but discussions with Toyota, Tata and Nissan were unsuccessful. The Saudi National Automobile Manufacturing Company (SNAM) and South Korean company SsangYong did establish a partnership in 2019 to produce up to 30,000 SsangYong cars per year in a SNAM assembly plant beginning in 2021. More recently there has been a significant success in Saudi Arabia. The United States-based EV manufacturer Lucid Group announced in February 2022 a long-term plan (15 years with $3 billion in financing and incentives) to build its first international manufacturing plant in Saudi Arabia. It is projected to produce more than 150,000 vehicles per year and will foster advanced engineering, R&D and manufacturing expertise in a local workforce (more than 4,500 jobs in King Abdullah Economic City). At the signing, the Minister of Investment described the effort as Saudi Arabia “taking a major step towards our goal of diversifying our economy by creating a new manufacturing hub to spearhead the future of mobility for the Middle East region”.

2. E-mobility start-ups are also emerging in the Arab region

In 2021, a new Lebanese EV producer, EV Electra, introduced a car developed “from start to finish” in the country. Production will begin in 2022 with targeted capacity of 10,000 EVs each year. The workforce of 300 includes Palestinian as well as Lebanese engineers, and the company plans to install 100 potentially solar and/or wind-powered charging stations across Lebanon. An Omani start-up, Mays Motors, has also announced a locally designed and manufactured EV with initial production of 600 cars per year starting in 2023. It is being developed with the support of investment accelerator Oman Technology Fund and the Ministry of Commerce, Industry and Investment Promotion. Mays co-founder Haider bin Adnan al Zaabi described it as “an innovative Omani product built with Omani hands and backed by Omani technical knowhow” and “the beginning of a new and promising sector in the sultanate”. Kuwait Ports Authority (KPA) in August 2021 signed an agreement to build the region’s first dedicated city to provide all port and logistics services and other infrastructure to the major manufacturers importing EVs to the region. The General Manager of KPA described the project as “in line with Kuwait’s Vision 2035 to diversify the country’s economy”. Developing e-mobility industrial supply chain capacity also already involves the region’s start-up and entrepreneurial sector in other ways, in the micro-mobility and MaaS elements of the e-mobility spectrum. The local technology development is not – yet – extensive in the manufacturing of EVs but rather in the information and communication technology that powers electric micro-mobility and mobility-as-a-service (MaaS). Fenix, an e-scooter provider that has incorporated q-commerce deliveries into its business model, is operating to date in Bahrain, Qatar, Saudi Arabia, Türkiye and the United Arab Emirates. Like other micro-mobility and MaaS companies, the app developed by Fenix uses proprietary software and interfaces to manage bookings, maintenance, payments, e-commerce and more. They also co-develop the scooters along with their intelligence and software, and use swappable batteries, a feature they opted for in recognition of distinctive characteristics of the Arab region market. Careem launched in 2012 in Abu Dhabi and Dubai as a “value-added aggregator of private cars (limos) and taxis in the Middle East”. It has expanded to offer a variety of services in more than 90 cities, primarily in the Arab region, including ride hailing, bike sharing, food and grocery orders, delivery services, bill payments and more. They have developed a highly regarded mobile “super app” that enables all these services and also now encompasses cutting edge peer-to-peer (P2P) fintech. They have also developed and leverage smart systems for tracking vehicles and predicting high-ridership/user areas. Swvl is a transit-as-a-service or TaaS solutions company powered by cutting-edge technology of its own design and development for dynamic routing, network planning, demand estimation, fleet optimization and other transit services. They currently operate in Egypt, Jordan, Saudi Arabia and the United Arab Emirates in the Arab region, and recently announced a new strategic partnership to begin operations in Kuwait. With backing from global strategic and financial investors including Agility and Luxor Capital Group, their recent listing on Nasdaq made Swvl the first TaaS/MaaS company to list on any stock exchange, with expectations of a valuation of more than $1 billion. In March 2022 Swvl partnered with mobility fintech company Moove to further scale operations as well as expand their vehicle options to include electric buses. Manufacture of electric two- or three-wheelers is beginning to emerge in the Arab region but is currently very early. One example is Bako Motors, a German-Tunisian start-up that will begin producing a range of electric bicycles and tricycles of its own design in late 2022 for sales targeted throughout Africa. The company plans to launch a subsidiary in Riyadh in 2023. Micro-mobility could potentially open up the vehicle design and manufacture element of the e-mobility value chain to middle-income countries, least developed countries and countries in conflict. As one analysis notes, “because of their relatively simple construction, and market growth, smaller countries are likely to initially develop assembly and retrofit of two- and three-wheeler as an interim step to development and manufacture”. An example is Opibus, a company in Kenya that converts used ICE vehicles to electric. The company has developed and is selling a new electric motorcycle with design specifications mindful of local road conditions and local users’ long-distance driving needs. McKinsey analysis similarly notes that “EV companies could consider investing in homegrown-product innovation to design or tailor EVs for local needs and conditions”, and “local vehicle assemblers may also invest in national and regional supply chains by manufacturing some parts locally”.

C. The automotive supply chain is transforming, creating opportunity for the Arab region

The global supply chains of the mobility industry ecosystem are being transformed by the exponential growth of highly digitalized and connected EVs, and by several other dynamics independent of but relevant to the growth of EVs. This is creating new kinds of opportunities for existing and aspiring suppliers. Different countries in the Arab region can diversify and grow their economies in different ways by increasing their roles in these global supply chains.

1. New OEMs emerge to challenge the legacy automakers as they adapt to electric

One of these dynamics is the emergence of new electric vehicle OEMs. Tesla today is the most well known and most successful, but numerous others have joined them in the market including Rivian, Nio, Lucid, Li, XPeng, Fisker and many more – with an estimated 200 EV start-ups in China alone. It is anticipated that only a fraction of these companies will succeed and sustain, for a variety of reasons. These include difficulty raising capital, supply chain vulnerabilities, uncertainty of ongoing policy support from Governments and most importantly a near-term or longer-term mismatch between demand and supply. But those that do survive are anticipated to operate differently than traditional automotive OEMs, including with respect to where they situate their manufacturing and assembly plants. They will also likely be less bound to the well-established suppliers at all tiers of the automotive supply chain, by choice for flexibility and in part because such suppliers may be contractually obligated to larger OEMs, or focused on meeting demand from their current customers. Timely emergence in the Arab region of component suppliers and other mobility value chain partners can align with expected interest from new EV OEMs. The risks of supply shortages and bottlenecks in the automotive supply chain model, recently highlighted by the COVID-19 pandemic, are anticipated to spur OEMs to desire supplier networks more local to the markets they serve. As the market demand for EVs grows in the Arab region, this dynamic could create opportunity for local Tier 1, Tier 2 and Tier 3 suppliers. Tier 1 suppliers are companies that supply parts or systems directly to OEMs. Tier 2 suppliers make parts that are included in assembled automobiles, selling them not directly to OEMs but to Tier 1 suppliers. Tier 3 suppliers produce raw or close-to-raw materials like metal or plastic and provide them to companies at all levels above them in the supply chain including OEMs. Today’s model of highly globally distributed sourcing, with components and inputs to components engineered and then shipped across multiple international borders, is being questioned as never before by both new and established OEMs. Sourcing from suppliers in the Arab region market would mitigate some of the vulnerabilities that EV manufacturers face, if suppliers emerge to meet the demand. The carbon emissions of transporting automotive components around the world is also a consideration in light of increasing pressure from regulators, public interest advocates, investors and others to make the entire automotive value chain more sustainable. OEMs and their suppliers are compelled to consider this, from responsible mining of metals to sustainable waste disposal. They must also consider environmentally conscious distribution of parts and finished products, recyclable packaging of components being shipped, sustainable warehousing and inventory management and more. This could promote interest on the part of global OEMs to partner with Arab region suppliers in serving local Arab markets, as well as factor into their decisions on situating manufacturing and assembly plants in the region. A recent McKinsey report cites analysis suggesting “transportation costs related to CO2 would have to rise by a factor of ten to erase the benefit of having a plant in a lower-cost geography”. But if labour costs in the Arab region were comparable, the proximity to market and to a local supplier network could be attractive from a sustainable footprint standpoint.

2. Priority opportunities for the Arab region in the e-mobility value chain

Manufacturing and assembly of complete EVs, whether by homegrown start-ups or in partnership with established global OEMs, would be only one part of an Arab region e-mobility industrial ecosystem future. The potential for expansion of capacity and capability in the Tier 1, Tier 2 and Tier 3 supply chain niches is important as well. The Middle East automotive spare parts market is projected to grow at a steady rate out to 2026 and beyond, including exhaust systems, braking systems, batteries, electrical systems and others. Manufacturers of these parts are working to set up localized manufacturing companies to reduce import costs, with the investment poised to boost and diversify local economies. Automotive aftermarket sales are projected to increase by more than 35 per cent to nearly $40 billion in the region between now and 2024. Looking at EVs specifically, McKinsey notes that EV components are the only sub-sector of automotive components anticipated to grow between now and 2030, rising from 9 per cent to 42 per cent as a share of the global value chain. These components include electric motors, battery management systems, low- and high-voltage battery cells and fuel cells. The International Energy Agency notes a number of EV components as being in critical need of supplier expansion, including battery metal processing and refining, cathode and anode manufacturing, separator manufacturing, cell production and battery assembly. The analysis goes on to note that “each of these industries, some of which are nascent, need to expand rapidly to avoid bottlenecks that would slow down the transition to full electric mobility”. Building capacity in these areas could represent opportunity for the Arab region to serve not only its own but also the larger global market for EVs, and thereby also serve economic diversification. Battery-related technologies and services (manufacture, mineral refinement and provision, other sub-component development, recycling, swapping, etc.) and charging infrastructure (manufacture, installation, maintenance) could be particularly beneficial priorities in an e-mobility component of broader economic diversification strategies. By most analyses, batteries and charging will be the greatest financial opportunities in the EV value chain, each representing hundreds of billions of dollars of investment to come in the next two decades and beyond. Arab countries can be part of these opportunities.

3. Batteries and battery-related technology and services

Passenger EVs will be the majority (55 per cent) of a projected more than 8 TWh global battery demand in 2030, up from approximately 1 TWh today. Over that period, the demand for EV batteries will rise nearly fifteen-fold. Calculating from announced production targets of current suppliers, only about 60 per cent of the expected 2030 demand will be met, pointing to the need and opportunity for new suppliers to emerge. In the Arab region market alone, estimates for the EV battery market range indicate a 16 to 22 per cent compound annual growth rate between now and the end of the decade, to more than $125 billion. Trends in the battery production industry indicate the potential benefit for Arab countries of prioritizing development of technical and industrial capacity in this area. With China dominating approximately 80 per cent of global battery cell production capacity, the United States, countries throughout Europe and Asia and others in the rest of the world are racing to increase their capacity. In response to the soaring demand, current battery producers globally are crafting and implementing expansion strategies, in some cases representing billions of dollars in investment, to open new “giga-factories” to supply cells to automakers. Joint ventures between OEMs and battery manufacturers are proliferating – examples include agreements between Volkswagen and Bosch, Stellantis with both LG Energy Solutions and Samsung, GM with SolidEnergy Systems and others. Efforts by Governments and private sector interests in the Arab region to develop technical capabilities in battery production can be anticipated to be met with interest by EV manufacturers in all geographies. Co-production ventures with existing battery manufacturers as part of their expansion could be one potential outcome. Partnerships with OEMs could also be part of the future. Stellantis managing director for the Middle East Markus Leithe recently said a battery production plant in the region “is possible … we have had some very initial exchanges of opinions around that … there is definitely an interest coming from governments around that”. OEMs are also establishing partnerships upstream in the battery supply chain, seen for example in two recent BHP agreements to supply nickel sulphate to Tesla and the Toyota-Panasonic joint venture Prime Planet Energy and Solutions. Some countries in the Arab region have potential to benefit from this trend given proven supplies of minerals essential to EV batteries. One agreement already in place is between BMW and Managem Group of Morocco for €100 million to provide 20 per cent of the cobalt that BMW will require for battery cathodes between now and 2024. Other types of international agreements related to battery raw materials are also emerging. In November 2021, Khalifa Industrial Zone Abu Dhabi and Australian mineral exploration and development company Lepidico announced an agreement to build the first lithium production facility in the Arab region. The company’s managing director indicated their interest in “bringing the lithium chemical industry to [not only] the United Arab Emirates [but also] the wider Middle East region”. Saudi Arabia signed agreements in 2021 with another Australian company, EV Metals Group, for a $3 billion investment in lithium and nickel processing plants, as well as license applications to explore for these and other battery minerals in the country. In an October 2021 interview with Bloomberg, Abdulaziz Al Harbi, CEO of Saudi Arabian Mining Company (Maaden) said “in the next 10 to 20 years we are going to spend huge amount of money looking for those metals in Saudi Arabia”. Another opportunity in the Arab region is the circular economy prospect of building and operating EV battery recycling plants and building new plants to recycle phased out ICE vehicles. There are several battery recycling plants in Dubai, such as Dubatt, a fully integrated lead acid battery (LAB) recycling plant at Dubai Industrial City. Currently there are no single plants in the Arab region specialized in EV battery recycling, but existing battery recycling plants could look to expand to the recycling of EV batteries.

4. Charging infrastructure and related technology and services

As with batteries, the requirements for EV charging stations will be huge as the number of EVs of all types rises sharply, representing significant opportunity if the industrial capacity to serve the market is developed in the Arab region. Bloomberg projections in a conservative scenario are that nearly 300 million charging points will be needed globally by 2040, requiring nearly $600 billion in investment. Their scenario achieving net-zero tailpipe emissions for the global road transport sector would require some 500 million charging stations and represent a market investment of more than $900 billion. Demand in the Arab region is projected to grow from $130 million in 2020 to $93 billion by the end of the decade, a 45 per cent compound annual growth rate. McKinsey emphasizes that “now is the time for EV charging companies to invest in production capacity and a skilled workforce … [and] build out factories and supply chains in relevant regions to match demand [as] the foundation for successful rollouts of chargers in the coming years. There is already nascent charging infrastructure manufacturing capacity in the Arab region to further build for a greater regional role in this segment of the EV value chain. In Morocco, a 100 per cent indigenous production line for “iSmart” EV charging stations began operation in 2021 in the city of Benguerir, projected to produce 5,000 terminals per year intended for the local and broader Africa markets. It was developed by Green Energy Park, a consortium of three research institutions supported by the Ministry of Industry, Trade and Green and Digital Economy and the Ministry of Energy, Mines and the Environment. Green Energy Park is also developing a fast-charging terminal. Revolta, one of three Egyptian companies in the EV charging infrastructure sector, opened its production facility in 2019, in partnership with Ukrainian company EcoFactor. As part of the project by state-owned El Nasr Automotive Manufacturing company to build EVs with a Chinese partner, the Egyptian company Infinity plans to build and install 3,000 charging stations throughout the country. And in a recent report, the intergovernmental organization Regional Center for Renewable Energy and Energy Efficiency (RCREEE) recommended charge point manufacturing as a promising source of economic income in Egypt.

D. Developing workforce skills is key to Arab region growth in the e-mobility industrial supply chain

Looking to the e-mobility industry supply chain as an element of Arab region economic diversification is an opportunity to increase jobs in the region that leverage technical skills. With the increasing digitalization of electric cars and other e-vehicles (to operate, and for their connections to grids, IoT and each other), expanding automotive and mobility-related industrial capability in the region can also be an investment in developing digital skills (especially among young people).

1. Automotive and mobility sector skills increasingly are digital skills

Skills relevant for a growing number of jobs in the e-mobility sector will be transferable to and from other sectors that will also be part of countries’ economic diversification strategies and objectives. In addition to traditional industries becoming more digitalized, the broader “green economy” objectives of all countries of the region, outlined in national plans and visions, will require many of the same skills as a focus on the e-mobility industry supply and value chain. With the vehicle fleet in the Arab region and globally shifting to electric (all modes, from cars to buses to two- and three-wheelers) and becoming increasingly digitalized, the automotive industry’s jobs of the future won’t look like the jobs of the past. As the International Labour Organization notes, “digitalization is heralding a new era in the industry, employing technologies including advanced analytics, artificial intelligence, sensors, the internet of things, cloud computing, blockchain, cyber-physical systems, machine learning, robotics, and 3D printing”. Additionally, “EVs will also create job gains in the electricity generation sector, production and deployment of EV charging station infrastructure, and manufacturing of batteries, electrical parts, and related machinery”. To establish a growing role in the e-mobility industry, meeting the demand for the necessary tech-skilled labour will be a challenge for the Arab region. At the same time, there are foundations of digital adoption, technology-based innovation in some industries and commitments to high-tech skill development to build on. While most businesses and Governments remain slow to digitize, McKinsey notes strong consumer digital adoption (primarily in GCC countries but climbing in other Arab countries). They also note that the large tech-centric demographic under age 24 can be expected to accelerate the trend and pressure business and government to catch up. In an assessment of 150 firms in the Arab region (focusing on the largest companies in the GCC countries), BCG found between 53-64 per cent in three sectors (tech, financial and consumer) to be digitally mature based on 36 criteria. Progress on digitalization extends beyond the GCC countries. Jordan has emerged as a digital hub for the region, with hundreds of ICT companies and a national broadband network expected to soon support 5G and provide high-speed connectivity to thousands of public sites as well as businesses and homes. Morocco has a growing aerospace sector of more than 100 companies with a workforce of more than 15,000 and increasing digitalization. Egypt recently launched a “Digital Egypt” initiative designed in part to “encourage entrepreneurship and promote research and development and innovation in the field of ICT to drive sector growth and position Egypt as a regional innovation hub”. It is also intended to develop digital skills in the workforce and population. The International Data Corporation finds that 76 per cent of manufacturers across all industries in the Middle East, Turkey and Africa have or will soon launch some form of company digital transformation initiative. They project $229 billion in ICT spending in countries in the region in 2022 ($137 billion in telecommunications and $92 billion in IT, including $40 billion in enterprise IT spending). A recent analysis of investments into Arab region-based tech start-ups from 2019 through 2021 shows more than 1,300 deals across multiple sectors with a total value of $2.9 billion in 2021. The number of deals increased 60 per cent from 2020 to 2021. The value of these deals region-wide more than tripled, including a 350 per cent growth for North Africa-based start-ups. Investment in companies in Levant countries are growing more slowly. Iraq, Morocco and Qatar saw the largest increase in the number of deals. The number of global investors investing in Arab region-based tech start-ups more than doubled from 2020 to 2021 and the number of deals they participated in grew by more than 50 per cent. Investments spanned start-ups in fintech, enterprise SaaS, e-commerce, health-tech, logistics, ed-tech and 12 other sectors. Notably, there were 39 investment deals in start-ups in the automotive sector and 43 in the transportation sector. All of this activity indicates an emergent digital skill base in the region that can be further accelerated by and for development of e-mobility-related industrial capability.

2. Skills for the e-mobility value chain can boost broader economic diversification aims

If countries can begin in the near term to overcome education and skill deficits, the scale and pace of growth across the e-mobility industry value chain presents substantial opportunities to boost economic development and diversify economies. The long-range plans and vision documents that outline many countries’ economic diversification aims also outline accompanying objectives for the accelerated development of the kinds of skills needed for the future mobility industry and other industries that are becoming more digitalized. Movement from intent to implementation is underway in a number of countries. In the United Arab Emirates, a National Program for Coders is attracting and training 100,000 coders and establishing 1,000 digital companies over five years, in collaboration with Google, Microsoft, Amazon, Cisco, IBM, Hewlett Packard Enterprise and others. Efforts under Digital Egypt include the Egypt University of Informatics, the Digital Egypt Builders Initiative and several programmes for digital skills development for young people. In Saudi Arabia, a collaboration between General Assembly and the MiSK Foundation is training thousands of young people in new tech and digital skills. Private sector skill training providers and social sector organizations are also playing a growing role in building the skills in Arab countries that will be essential for developing e-mobility industry and supply chain capacity. It is expected that the automotive industry in the region will itself also invest in the development of necessary skills for its workers relevant to e-mobility technologies. In 2019, BMW Group Middle East opened a new training centre with capacity to train thousands of technical and other staff in current and emerging developments in automotive technology including hybrid and all-electric vehicles. Hyundai has operated training centres in the region since 2013 and in 2019 the exclusive distributor of Hyundai in the United Arab Emirates launched the Hyundai United Arab Emirates Training Academy. In Morocco, the Automotive Industry Training (IFMIA) operates as a public-private partnership with four training centres for technicians and other industry staff roles, one of which is run by Renault at its plant in Melloussa.

E. Key challenges in pursuing this e-mobility pathway

Progression on this pathway to an Arab region e-mobility future faces some key challenges that are foreshadowed in the preceding narrative.

1. Current skills deficits and barriers to overcoming them

Even with the encouraging indications described above, developing the workforce skill base for growing e-mobility supply chain capability in the Arab region will be a challenge. In an assessment of 130 countries, the World Economic Forum found the region effectively leveraging only 62 per cent of its human capital potential – approximately the global average, but 10-15 percentage points below the top performing countries. They cite the nearly 40 per cent of employers in the region that see skills gaps as “a major impediment to business growth”. Survey analysis by Arabnet shows in particular “an acute digital skills gap – digital talent only accounted for 1.7 per cent of the workforce in 2017, [with] skills around hardware and IT, development/coding, product design, and data and analytics some of the least available”. Further reflecting those findings is another survey, by PwC in 2019 of CEOs in the Middle East, in which 70 per cent indicated the lack of availability of key skills (primarily digital and analytic) as a concern and threat to business success. In January 2021, that percentage had risen to 81 per cent.

2. Skills for the e-mobility value chain can boost broader economic diversification aims

2. Attracting investment in the region and its industries The challenge of increasing investment into the Arab region is pinned to global capital flows and structural trends in the global economy. World exports as a percentage of GDP declined from 29 per cent in 2010 to 26 per cent 2020 and global foreign direct investment (FDI) declined by 36 per cent over the same period. This has been driven by multiple factors including the rise of populism, higher trade barriers and the shift of consumer spend from manufacturing to service sectors, which are more difficult to export. The pandemic accelerated this reversal, revealing the fragility of global trade and supply chain activities. The Middle East has been especially vulnerable to some of these disruptions, and recent gains from some of the rising costs of energy among its oil and gas exporters have been uneven and tend to exacerbate differences in access to capital (particularly in the rising cost of borrowing). Investment in the oil and gas sectors globally has been ceding market share to investments in renewable energy, batteries and the technology sector in general, and the Arab region is not (yet) a strong pull for this investment. Traditional greenfield FDI into the region remains highly concentrated in the Gulf, with only a few other bright spots in venture capital investment and new technology start-up ecosystems. The start-up ecosystem will increasingly emerge as a driving force of the region’s economic and social development, and e-mobility industrial supply chain capacity development can be part of that over time, but the region is not yet there. Additionally, laws and policies designed to protect the interests of State-owned enterprises historically have been impediments to attracting investors to the region, in the form of high minimum capital requirements, ownership restrictions limiting stakes in companies, local production rules and licensing processes. These are diminishing but their legacy has not been entirely overcome.

3. Intraregional trade relationships and mechanisms

Intraregional merchandise exports in the Arab region during the period 2015-2019 represented between 10.4 to 12.8 percent of total merchandise exports, while intraregional merchandise imports represented between 13 to 13.8 percent of total merchandise imports during the same period, compared for example to the European Union where 63 per cent of total trade from the region is intraregional. One of the reasons for this low intraregional trade among Arab countries is the limited size of the private sector, with fewer firms and few large firms of scale. Additionally, the extent of government ownership in transportation and telecom sectors in the region is significantly higher than other sectors. This is visible for example in Qatar (approximately 80 per cent government ownership in the telecom sector), Algeria (nearly 100 per cent government ownership in the transportation sector) and Tunisia (approximately 80 per cent government ownership in the transportation sector). These sectors together with storage currently contribute close to 8 per cent of Arab countries’ GDP. Regulatory barriers to market entry remain significant in the region, with restrictions limiting the flow of capital, how companies expand and how new businesses are started in different markets across the region. Obstacles in regulatory regimes include new construction permits, access to credit, protecting minority investors, cross-border trading, contract enforcement and resolving insolvency. Finally, cross-border transport infrastructure in the Arab region is underdeveloped and its development over the last 20 years has been a mixed picture. Where such infrastructure is lacking, trade and economic integration are naturally restricted.

Establish a coherent and consistent policy framework with clear strategic goals, incorporating economic, fiscal and other types of policy levers, to stimulate Arab markets for e-mobility and reduce investment risk for current and aspiring manufacturers and suppliers in the region

Greater demand in the Arab region for EVs could motivate local companies to start or grow businesses across the automotive and broader mobility value chains. In addition to the stimulus to current and emerging Arab manufacturers, major global automakers will respond to the growth of Arab country markets with increased supply. This could create opportunity for local companies to pursue partnerships with those manufacturers as component suppliers. As noted above, supply chain trends favouring supplier relationships closer to the markets being served could make regional companies more attractive as Tier 1 and Tier 2 suppliers, potentially promoting the growth or start-up of such companies. Continued attention to revising laws and policies historically designed to protect the interests of State-owned enterprises will be important to encourage private investors and start-ups. In parallel, Governments in the region can stimulate demand for EVs to stimulate such supply chain partnerships through a variety of policies, advancing the trend of e-mobility overall as well as the more specific aim of growing local e-mobility industries. One such policy could be the removal or reform of transportation fuel subsidies, as has been done in some countries. For example, Qatar increased gasoline prices by 25 per cent and an additional 30 per cent in 2016; Saudi Arabia did so by 55 per cent in 2016; and in 2015, the United Arab Emirates liberalized retail fuel prices based on average global prices for diesel and gasoline, with prices updated on a weekly basis. Other policies could include for example: stringent fuel economy and greenhouse gas emissions standards; subsidies for consumer purchases of EVs; target dates for phaseout of ICE vehicles; reducing or eliminating vehicle import duties for EVs (ensuring this does not conflict with efforts to promote the production of EVs locally); mandating purchase of clean fuel vehicles by public sector entities; priority use of carpool lanes for EVs; banning ICE vehicles from city centres; regulating the used vehicle market to minimize ICE vehicle imports from the Global North; creating incentives for the recycling and use of ICE vehicle parts in the manufacturing of new EV vehicles and other products; and others. Some such policies are already in place or planned in some countries. It is important that the policy framework developed to stimulate EV demand overall be well-thought and balanced to ensure that incentives to suppliers expand partnerships with local manufacturers instead of only increasing importation of final products manufactured outside the region.

Create and implement systems of policy, institutional, fiscal and financial support and incentives to Arab companies in e-mobility industrial supply chain ecosystems

A variety of measures can be established by Governments throughout the region to promote the start-up and growth of native businesses in the e-mobility value chain and to attract automotive OEMs and Tier 1, 2 and 3 suppliers to the region. In doing so, it is important to ensure that the products produced locally are fully compatible and of the same quality standards as those produced by OEMs in their own countries or elsewhere. Morocco already has a system of such measures, under its Industrial Acceleration Plan, which includes: “free zone” (offshore) status which grants exemptions on corporate taxes and VAT to companies in six “automotive ecosystems” that export 85 per cent or more of their production; direct financial assistance to companies in these ecosystems; and access to offshore banks for customized financing packages and assistance in complex foreign trade operations. Several ASEAN Governments have extensive automotive sector support policies and programmes that offer models potentially adaptable in the Arab region. Examples include Indonesia which has a variety of such policies in place including some specifically to promote local EV manufacturing. One is an up-to-100 per cent deduction of corporate income tax for companies that produce cars with integrated battery and electric motors as well as electric two- and three-wheelers and electric motors and parts. Malaysia has an extensive “National Automotive Policy 2020” designed to make the country “a regional leader in manufacturing, engineering, technology and sustainable development in the automotive sector” including EVs and much more. It includes a variety of government investment funds to support local companies’ R&D, engineering and manufacturing capabilities; initiatives to attract FDI in the country’s automotive companies; and export promotion programmes, trade investment missions and Free Trade agreements to promote local industry.

Emphasize mobility sector-relevant skills development in national and other education and training initiatives supporting economic diversification

All Arab countries have plans and visions in varying forms for diversifying their economies over the next 5 to 30 years that include initiatives to improve education systems and provide skill training for citizens. The Vision 2030 of Bahrain describes a strategy to “provide quality training to our people in the applied and advanced skills required for global competitiveness and attracting new industries to Bahrain”. The Vision 2040 of Oman describes “establishment of a stimulating education system and vocational training” to “enable better adaptation of the Omani labour market to the new global future of jobs”. The Vision 2030 of Iraq includes targets in the medium term to “improve technical and vocational education” and in the longer term “to establish more vocational schools and institutes to meet the labour market needs”. Similar objectives exist across the region. In such programmes, skills relevant to the electric and digitalized future of mobility should be emphasized. Training in ICT hardware and software development and application will be valuable for countries to develop industry capacity across the entire mobility systems supply chain. Some initiatives should focus specifically on EV and EV component-related technical skills such as electric drivetrain maintenance, EV charge point installation, vehicle retrofit, battery management, battery swap system logistics, etc. Private sector provision of e-mobility relevant skills and training across the region, and public-private partnerships such as the Moroccan Automotive Industry Training Institutes, should be promoted as well, for example potentially through tax incentives.

Use vehicle import duties and other automotive trade regulations to incentivize mobility system manufacturers to incorporate Arab suppliers in their supply chain

Governments in the Arab region could leverage their taxation and other regulatory powers to promote indigenous businesses that are seeking entry or growth as suppliers in the e-mobility industrial ecosystem. While the complete-vehicle manufacturing capacity of local producers is beginning to grow, vehicles including EVs in the region will be predominantly imported for the foreseeable future. Rather than establish local content requirements that risk long-term negative effects on their economies and competitiveness, countries could reduce or waive vehicle import duties on EVs of all types that have some selected percentage of local suppliers in their supply chain. Other taxes on imported EVs such as VAT, sales tax, luxury tax, port tax or tariffs on raw materials used in EV manufacturing could be considered in a similar manner.

Prioritize the battery and charging station elements of the e-mobility supply chain as areas of focus for industry capability and capacity development in the region

This study and other research overwhelmingly point to two areas as the lynchpins for scaling e-mobility globally: increased battery production and battery technology advancement and increases in charging infrastructure production and deployment. Between 2020 and 2030, global demand for EV batteries is projected to grow by a factor of 15, from a market of tens of billions to hundreds of billions of dollars. The charging infrastructure requirements will be of a comparable scale, with hundreds of millions of devices needed and hundreds of billions of dollars to be made through manufacturing, installing and servicing them. The very fast and much more powerful chargers (500kW or more) necessary for heavier commercial cargo trucks will be part of the need in the region and globally and should also be part of the charging technology manufacturing capability that Arab countries work to develop. Investments by Arab region companies to develop the capability and capacity to serve these immense markets have the potential to create the greatest number of jobs of any investments in the e-mobility industrial ecosystem. Actions by Arab Governments to support the creation and scaling of these companies with financial and other interventions should be a priority for that reason. Supply chain resiliency concerns can be expected to make global EV manufacturers eager for redundant battery and charging station supplier options, boosting the prospects for Arab region companies. In the battery area, in addition to manufacturing there will be recycling, swapping and other related sub-industries to grow. In the charging area, installation, maintenance, data management and other sub-industries will grow alongside the potential for manufacturing.

Prioritize the creation of partner relationships with new and emerging EV manufacturers outside the Arab region

The investment and other commitments of established automotive OEMs to EVs and e-mobility are substantial, demonstrating an ability borne of their financial power to pivot from traditional business models. At the same time, their size, and responsibilities to shareholders, present operational constraints that are not shared by many EV start-ups. The relative freedom of these start-ups include where and how they build their manufacturing, assembly and other production-related facilities and where they build their supplier relationships. Existing and aspiring e-mobility component suppliers should pursue the new EV OEMs as a priority. Two-thirds of automotive suppliers surveyed by McKinsey in April 2022 did not anticipate significant revenue in 2030 from business partnerships to supply new OEMs like Nio, Lucid, Rivian or other even newer start-ups, including those working in the electric medium- and heavy-duty cargo truck space. If established Tier 1 and Tier 2 component suppliers focus on their traditional OEM customers, focus by Arab region companies on new OEMs could present opportunities with less competition over the next decade and beyond to grow the region’s e-mobility industrial capacity. As newer OEMs compete for Arab region EV market share, local supplier partnerships will also be attractive for efficiency and cost reasons and to help meet pressures to lower the carbon footprint of their operations. Arab region Governments can play an important role in promoting these partnerships and providing the right investment climate to encourage external producers to partner with domestic ones, making use of the comparative edge as well as benefiting the region.

Focus on developing EVs and related technologies that are tailored to distinctive needs and conditions of the Arab region as high-potential niche markets

Competition in the electric vehicle markets for all types of EVs focuses largely on cost and range, but also on other features. In addition to technology and performance features that will be attractive to consumers irrespective of market, there are opportunities in developing vehicles and parts that are customized to the environmental, social, economic, consumer preference and other conditions of individual markets. Start-ups in the Arab region could focus on local markets with EVs and components for EVs that are designed specifically for those markets. One area could be vehicles ruggedized for the heat and other environmental conditions of the Arab region. Extreme temperatures have a range of detrimental effects on EVs, primarily related to battery degradation and fast charger degradation. Dust and sandstorms can be damaging to the power electronics of EVs and their batteries and chargers. Current and aspiring technology companies in the Arab region could choose to focus on innovations to contend with such conditions. They would have a substantial local market to serve, for cars and also buses if transit authorities continue to scale up procurement, as well as opportunities in other high-heat geographies. Low-cost electric passenger vans to help make the informal public transit sector in the Arab region more sustainable could be promising. Two- and three-wheel EVs customized to extreme heat environments could be another focus area that could grow Arab region mobility industrial capacity while also accelerating the economic opportunities that electric micro-mobility and electric-powered MaaS could enable. Opibus in Kenya is an example of a start-up pursuing this path with e-motorcycles tailored to that country’s distinctive needs. Policies by Arab region Governments to financially and otherwise support development of an e-mobility industrial supply chain could target the provision of additional support to local companies which develop region-specific customized vehicles and vehicle components as well as to companies that convert ICE vehicles to electric.

1. Grid challenges pose challenges to e-mobility

The enabler of any low-carbon technology implementation is infrastructure, and at the core of e-mobility deployment, and the renewable energy transition it relies on, is the power grid. At different levels, Arab countries’ power grids are characterized by a set of challenges including unreliability, limited capacity, inefficiency, low flexibility and underinvestment. Resultant problems such as shortages, blackouts/brownouts and uneven access are present even in higher-income countries and are acute in the least-developed countries and countries in conflict. According to the World Bank’s index (2019 data), the reliability of electricity in the Arab region overall is concerning. The GCC countries (save Qatar) plus Jordan, Morocco and Tunisia rank above the world median of 62 per cent, but only three of them are above 75 per cent reliability. The rest of the region is at or below the median, and the least developed and conflict countries are assessed at 0 per cent. Electricity losses (energy dissipated between the generation source and the end user due to technical and operational practice reasons) average 18 per cent in Arab countries, with Gulf states having the lowest values averaging at 8 per cent. Iraq, Lebanon and countries in conflict have the highest levels of technical and non-technical losses in the region, ranging from 35 to 50 per cent, meaning approximately half of the generated power is lost within the network. Arab countries’ grids also are characterized by low flexibility, and overall system flexibility dictates the level of renewable energy integration that is possible. The type of electricity generation units and the sources of generation directly impact the level of flexibility. Natural gas is the dominant source of power generation in Arab countries (between 90 and 100 per cent in Algeria, Bahrain, Jordan, Oman, Qatar, Tunisia and the United Arab Emirates), and many still rely on heavy fuel oil, diesel and coal as power sources. For Arab region grids, adding renewable energy capacity without adding to or improving system flexibility risks brownouts or blackouts. Countries in conflict (Iraq, Libya, the State of Palestine, Somalia, the Syrian Arab Republic, Yemen) have the highest grid reliability and flexibility challenges in addition to their very high losses. The state of the electrical grids throughout the Arab region is at the core of the e-mobility challenge as well as the renewable energy transition challenge. As described by the global research consultancy Wood Mackenzie, “fragile grids are a major bottleneck to the decarbonization of power, make power sector reforms difficult, are poorly positioned to provide resilience in the face of rising temperatures, and perpetuate civil unrest”. It will be essential to the future of e-mobility in the Arab region to address this, as EVs introduce new, transient and unpredictable point loads on grids whose resiliency is already challenged. Weather conditions of intense heat (especially but not only in summer), old and inadequate infrastructure, damage from wars and conflict and other factors also make grids a point of vulnerability for e-mobility objectives. Increased peak demands can be partially mitigated by using smart meters, distributed energy resources (DER) like solar and battery storage and advanced communication systems. But all of these require investment, as well as basic expansion, i.e. additional new substations and transmission lines. Some of this investment is underway and planned, with one analysis noting upwards of $17 billion on smart-grid improvements across the Middle East and North Africa between now and 2027 alone. Doug Waters, Global Director at Uniper Energy Services, noted at the Middle East Energy conference in Dubai in March 2020 that “MENA grid transformation is integral to optimizing renewable utilization, including for new technologies and demands like electrical vehicles”. There are also longstanding and newly emerging efforts to integrate the grids of different Arab countries as an element of the needed modernization and strengthening needed for e-mobility and other objectives. One is between Iraq and Jordan, projected to enable Jordan to deliver up to 1TWh/year to Iraq in the project’s first phase alone. There are also plans to develop a common Iraq-GCC power grid. A $1.6 billion project between Egypt and Saudi Arabia, in addition to an ambitious vision to connect the Morocco and United Kingdom grids with undersea cables. At the same time, projections are for progress to be difficult and slow, in part because financing models for grid modernization are few compared to those that are established and available for projects to increase power generation capacity. The absence of appropriate legal and regulatory frameworks and grid codes poses additional complications to cross-border grid integration in the region.

2. Meeting rising electricity demand with grid modernization and renewable energy is key to e-mobility

The significant projected growth in electricity demand in the Arab region will further exacerbate the grid situation, and further indicates that grid challenges pose risks to e-mobility and the renewable energy transition. Total electricity demand is projected to triple by 2050. Transport will be one of three sectors along with manufacturing and buildings driving growth in the region’s overall energy consumption. This is not a new phenomenon, but a further acceleration of one seen over the past 20 years. For example, the energy consumption increase in the GCC over that period was the world’s largest other than in China. It is widely understood that grid modernization is an imperative to satisfy transmission and distribution even for the region’s current electricity needs, let alone those of the future. Those needs will be driven in part by e-mobility. Globally the transport sector is responsible for more than 30 per cent of energy consumption and 25 per cent of energy-related CO2 emissions, and the sector’s energy demand has risen more than 20 per cent since 2010. In the near term, the increase in electricity demand in the Arab region for e-mobility will be modest. But this will rise over time (beyond 2030) to a need for an additional 10-15 per cent new electricity generation capacity, according to one World Bank estimate. In the United Arab Emirates, second to Jordan in EV penetration in the region, a 5 per cent EV share of the country’s total automobile market by 2030 would increase electricity demand by only 0.08 per cent, and by only 0.49 per cent even with a 30 per cent share. But for e-mobility region-wide in all its forms (considering personal EV ownership, e-bus fleet deployments, electric rail systems, electric two- and three-wheelers, etc.), substantial growth in electricity generation capacity will be needed beyond 2030. And while Bloomberg’s more conservative scenario projects EV adoption displacing more than 20 million barrels per day of oil by 2050 from the replacement of ICE vehicles, it remains unclear how much of the very large electricity demand for these EVs will be generated from fossil fuels versus renewable energy. In addition to e-mobility needing to be powered by renewable energy for its impact on climate and health to be realized, a variety of forces are driving the transition in the Arab region. These include COP and other diplomatic commitments, energy security concerns and economic opportunities and threats. In the context of COP, Bahrain and Saudi Arabia have pledged to be net-zero by 2060, and the United Arab Emirates by 2050, with each projecting upwards of $150 billion in green economy investments. Every country in the Arab region is planning for a significant percentage of its energy generation capacity to be from renewable sources by between 2030 and 2035. Pledges range from Morocco and the Sudan at 50 per cent, Egypt and the United Arab Emirates at more than 40 per cent and even some of the less-developed countries and countries in conflict at between 15 and 30 per cent. By 2050, solar is projected to be the main source of energy in the Middle East and North Africa, generating 39 per cent of total supply, with onshore wind second at 28 per cent. The tie between e-mobility and the transition to renewables is significant in specific ways in the Arab region. The International Council on Clean Transportation projects that transportation CO2 emissions in the Arab region will more than double between 2020 and 2050 in the absence of a shift to renewable energy sources powering clean means of mobility (electric or other). At the same time, the global growth of the EV market and shared mobility, along with fuel efficiency mandates driving R&D for improvements to whatever ICE engines still are being manufactured in the future, are projected to affect the economies of Arab region oil-exporting countries significantly. Oil demand for road transport is projected to peak in 2027 followed by an accelerating decline. Energy security and responding both to economic opportunities and economic vulnerabilities also are key drivers of the Arab region’s energy transition. High-income countries are either freeing oil for export and building their capacity to handle fossil fuel market volatility, as in Saudi Arabia, or reducing their need for gas imports, as in the United Arab Emirates. Most middle-income countries are targeting renewable energy to reduce their heavy reliance on fuel imports, with the exception of Algeria and Egypt which are aiming to displace fuel from power generation for exports. In the least developed countries and countries in conflict (with the exception of Libya), and in Lebanon, renewable energy is being embraced as much as resources allow, chiefly as a means to mitigate severe black-outs and other power problems. As yet, implementation of renewable energy currently lags well behind targets, with most countries in the region at less than 1 per cent of installed capacity and/or generation, with a few exceptions. The United Arab Emirates and Lebanon stand at 6 and 7 per cent of installed capacity respectively, and Egypt stands at 9 per cent of generation and 11 per cent of installed capacity. Jordan with 20 per cent of its generation and Morocco with 40 per cent of its installed capacity are leading renewable energy deployment among Arab countries. The most obvious consequence of the increasing electricity demand is further increasing the region’s already high natural gas dependence to the point of a risk of shortage. The gas demand in high-income countries has more than doubled in the past two decades, with two-thirds of the growth attributed to electricity generation. This is increasing the need for imports for most countries, tightening the export potential of some others, and increasing countries’ susceptibilities to political risks. The economic potential of renewable energy for the region is high, important for oil-exporting countries as the global demand for oil declines over the next two decades driven by e-mobility and other climate change adaptation strategies. Already Saudi Arabia and the United Arab Emirates are seeing their role in the renewable energy sector growing in the region (and beyond). The Saudi Public Investment Fund (PIF) holds a 50 per cent stake in ACWA Power, while Abu Dhabi’s National Energy Company (TAQA) acquired a 43 per cent stake in Masdar and Abu Dhabi’s National Oil Company (ADNOC) acquired a 24 per cent stake, and 33 per cent in Mubadala. These two companies are developing renewable energy projects in many countries in the region including Egypt, Iraq, Jordan, Morocco, the Sudan and the United Arab Emirates driven by their access to finance. A growing number of analyses point to the prospects of the region’s vast potential to generate renewable energy. One has generated models for “how the sunshine that so reliably bathes the region could provide a significant portion of the estimated 40,000 terawatt hours of electrical energy the world will need by 2050”. The means would be a “potential high voltage electricity transmission grid that would tap into solar energy

B. E-mobility has potential to help shift the causality conundrum toward a virtuous circle

Mass electrification of mobility could become an important element of the solution for improving flexibility and reliability in the electricity grids of Arab countries that today unreliably power not only EVs, but also the residential, industrial and other sectors of the region’s societies. In doing so, it could also help make possible the integration of high levels of renewable energy into the energy mix in the region, unlocking the immense potential of solar power in particular to transform Arab economies and mitigate climate change.

1. Electric vehicle batteries as storage for variable renewable energy

The variability of solar and wind power – uncertain output, intermittent availability and asynchronous interconnection to the grid – is what complicates the growth of renewables in any country. Matching the volume and timing of supply and demand in the face of those factors requires variation management solutions. Expansion and modernization of grid infrastructure and improved interconnection between different grids, both discussed above, are two of these solutions, and both must be pursued. Storage of variable renewable energy for dispatch when and where it is needed is an important solution as well. It is garnering increasing attention and implementation as advances in battery technology improve the economics and feasibility of grid-scale storage. For example, a recently completed three-year study by the MIT Energy Initiative details how “storage technologies will have the ability to substitute for or complement essentially all other elements of a power system, including generation, transmission, and demand response”. It will “make deep decarbonization of reliable electric power systems affordable” including in emerging market and developing economy countries including Arab countries. The batteries of EVs driving on the streets and highways of Arab countries is how e-mobility can be a factor in solving for grid modernization and renewable energy in the region. At the global level, EVs by 2030 will offer an aggregated storage capacity of 7 TWh of electricity, based on an estimate of 140 million total EVs. The same source projects a total of 30 TWh of storage capacity in EVs in 2040. To illustrate in an Arab region context, the European engineering and design consultancy AFRY estimates that if Dubai achieves its stated 2030 target of only 10 per cent EV penetration, this would create 3 GW of battery storage in the city’s vehicle fleet – enough energy to power 750,000 homes or their equivalent. As the number of EVs as a percentage of the car parc in all countries in the Arab region grows (total of all cars as well as buses and two- and three-wheelers), the potential for e-mobility as a variable renewable energy storage option in support of grids will be significant. The prospect of e-mobility as “variable renewable energy storage on wheels” can reduce the need for investment by Arab region utilities in stationary energy storage. There is a projected global demand of more than 2.5 TWh per year of stationary storage by 2030, accounting for 29 per cent of the total battery market. The same analysis by AFRY estimates that the Dubai government would be able to offset more than $100 million in spending annually on thermal and stationary battery capacity. Storage potential in EVs offers utilities and other power sector entities other financial benefits as well. In a paper published in Applied Energy, researchers from MIT and Princeton assess that “battery storage helps make better use of electricity system assets including wind and solar farms, natural gas power plants, and transmission lines, which can defer or eliminate unnecessary investment in these capital-intensive assets … substitution of batteries for generation or transmission capacity is a primary source of storage value”. While this judgment considers all forms of battery storage collectively, storage in EV batteries can play a growing role in this equation as e-mobility scales. Batteries and other energy storage systems can enable utilities to defer upgrades of their transmission and distribution networks, reducing the pressure to spend as much as fast on the grid modernizations described above.

2. Smart charging, and especially vehicle-to-grid (V2G), is the key to e-mobility facilitating the energy transition

There are several prerequisites for e-mobility to be able to play this role in Arab countries’ renewable energy transition and the reliability of their electricity supply. The most directly impactful of these is deployment of bidirectional charging infrastructure widely described as “vehicle-to-grid” (V2G) technology, a type of smart EV charging. Smart charging strategies (called V1G) will be essential in the Arab region, and globally, given the influx of EVs and the ultra-fast chargers (>150kw) coming online. Smart charging reduces costs associated with the fast and ultra-fast charging that are priorities for the mobility sector. Yet, slow charging is best suited for the smart approach because it boosts system flexibility. Unlike uncontrolled charging, it decreases simultaneity and lowers peaks in demand. Battery swapping, charging stations with buffer storage and night-time charging for EV fleets can also help avoid peak-demand stress from fast and ultra-fast charging. Smart charging could provide flexibility at both the system and local levels. At the system level, smart charging could facilitate balancing in the wholesale market. With V1G, EV charging patterns could be controlled to flatten peak demand, fill load valleys and support real-time balancing of the grid by adjusting the vehicles’ charging levels. With V2G, by injecting electricity back to the grid, EVs also could provide ancillary services to transmission system operators. Smart charging could help distribution system operators manage congestion, and could help customers manage their energy consumption and increase their rates of renewable power self-consumption. V2G is the form of smart charging technology that allows vehicle batteries (cars, buses and other EVs) to send electricity back to the power grid at times when it is needed to meet demand peaks. It is an element within a broader concept of vehicle-grid-integration (VGI) that envisions a suite of services provided through EV charging that individually and collectively contribute to reliable dynamic management of the grid. Batteries become not only the source of power for the EVs, but also backup storage cells for the grid, able to power houses, buildings and anything else connected to the power grid. Expanding the bidirectional charging to these other elements of the built environment is sometimes referred to as vehicle-to-everything or V2X. Bidirectional charging stations are equipped with software that communicates with the central grid to assess overall system demand at any given time, encourages consumption at off-peak hours and pulls in additional energy from connected vehicles when needed. For utilities, the economics of V2G are substantial incentives from the standpoint of reducing or even potentially obviating the need for some infrastructure expenditures. One recent study assessed that upgrading the grid in the city of Hamburg to manage the electricity distribution congestion projected in a future high EV adoption scenario would cost more than ten times the cost of the city implementing V2G charging infrastructure. In a study by Lawrence Berkeley Laboratory, a car parc of 500,000 battery EVs and one million plug-in hybrid EVs charging in a V2G infrastructure would eliminate the need for building an estimated $12-15 billion stationary storage capacity of 5GW. In comparative terms, V2G potentially could be of significant benefit in offsetting the scale of investments that will be needed to modernize grids throughout the Arab region and expand the region’s electricity generation, transmission and distribution infrastructure. A recent study on e-mobility opportunities and challenges in Egypt by the Regional Center for Renewable Energy and Energy Efficiency (RCREEE) noted the benefits of V2G for the grid in that country. They assessed that it has potential to help mitigate a number of the vulnerabilities that grids throughout the Arab region face. Specifically, V2G can contribute to preventing grid overloading, minimizing technical losses of power between the generation source and end users, recovering from failures, maximizing the proportion of renewables in the energy generation mix, reducing operational costs and maximizing profit. The benefits of V2G for EV owners and other citizens in Arab countries is another important dimension in considering the interrelationships of e-mobility, grid modernization and renewable energy transition in the region. The ability to send electricity back to the grid means individuals can sell that electricity back to the provider, representing opportunities for savings on household energy bills. One analysis (global, not Arab-specific) estimates savings of up to 15 per cent. A two-year-long V2G trial in the United Kingdom (Project Sciurus) saw its participants average £420 per year in financial reward from selling their surplus energy back to the grid. Such savings can partially compensate for the currently higher purchase cost of EVs and thereby potentially boost the adoption rate, for individuals and fleet owners. In Arab countries, the prospects for V2X may be of particular interest. In a region where the reliability of electricity is a critical vulnerability, enabling individual and fleet EV owners to help power homes and businesses could have significant benefits once V2G is able to scale. According to the Tokyo Electric Power Company (TEPCO), the inventor of bidirectional charging technology, one electric car can provide between three and four days electricity for an average family home. The smart battery software company Moixa estimates that 10 Nissan Leafs (currently one of the few V2G-capable electric cars) can power 1,000 homes for an hour. In an early and notable demonstration of the value of V2G for reliability, more than 60 Leafs were donated by Nissan to the emergency response and recovery effort after the 2011 Fukushima earthquake and tsunami. The EVs provided power during days of rolling blackouts that enabled area residents to heat their homes and charge computers and mobile phones. More recently, Ford F-150 trucks with special edition V2H (vehicle-to-home) adapters were employed during power failures during a winter storm in Texas.

3. Public transportation could play a distinctive role in the virtuous circle with V2G

As described in Section 3 of this report, the public transport sector in the Arab region is already making strides in the adoption of e-buses and electric rail and metro systems. Egypt has a project with the World Bank to procure 100 electric buses for use initially in Cairo and later throughout the country. It is also at work on its first all-electric high-speed rail line running 1,000 km from the Red Sea to the Mediterranean. In the United Arab Emirates, e-bus pilots are underway in Dubai, Abu Dhabi and Sharjah, while Qatar is pursuing a 25 per cent electric public transit bus target. Tunisia has completed an e-bus pilot, and Jordan is working on plans to electrify its entire public vehicle fleet. Morocco has launched an electric BRT (bus rapid transit) programme in Marrakesh that will expand to three additional lines and 48 additional buses by 2030. If it is equipped with future V2G charging models, electric public transportation in the region would have the potential to accelerate the use of renewable energy, not only to power its own vehicles, but also other sectors of the economies. As the International Association of Public Transport (UITP) describes, “the transport sector is typically a major land and building owner, so it can use its infrastructure and purchasing power to drive the demand for renewables in a city”. They go on to say that “given the significant size of new public transport infrastructure projects, they can lay a foundation” for renewable energy to become a larger component of a country’s overall energy mix, including Arab countries. Models exist that Arab transit systems could emulate and adapt to become more renewables-based in their operations. For example, the system in Fujian Province in China is equipped with integrated solar-storage charging stations for electric buses, saving up to 100,000 kWh of electricity each year. Madrid has solar PV on the roofs of its electric buses, providing up to 1 MW of renewable energy. Delhi’s Metro Rail Corporation has installed solar rooftops on all station buildings and depots with the capital cost invested by the solar developer. In one Arab region example that is already deployed, the Dubai Roads and Transport Authority has installed solar cells in RTA buildings and facilities including at its headquarters building, a metro terminal and nearly 900 bus shelters. The rail sector is the most highly electrified transport sector globally including in the Arab region, and operators in these systems also have an ability to directly link and power projects in their systems from renewable energy sources. As they grow, the e-bus fleets and railways of Arab region transit systems can become a significant factor in grid stabilization and management and renewable energy scale-up in their countries. If they are designed in the future to leverage a V2G/V2X model, they could help enable local grids to accommodate more variable renewable energy and help power local businesses and homes. Fleet vehicles are uniquely suited for V2G, given their regular and predictable usage patterns and the fact that they generally return to depots and terminals at the end of the day. They can charge sitting idle overnight at low-demand times to have full power to send back into their local grids during operations at more peak times. School bus fleet trials have been seen in the United States and the United Kingdom, providing proofs of concept that can be applied in other kinds of public bus fleets globally, including in the Arab region. Another way electric buses could contribute to the storage solution for renewable energy and grid management is by repurposing their batteries for stationary storage at the end of their expected life (length of time they are capable of powering and operating a vehicle, around seven years). Given the residual capacity remaining at that point, there is opportunity for second-use variable renewable energy storage by utilities or other enterprises in stationary applications. Increasing the residual value of electric buses in this way can also boost e-bus adoption by offsetting the investment risk for purchasers.

4. Arab region power markets must adapt to enable V2G and a renewable energy transition

For all Arab countries, the power market structure slows progress on the transition to renewable energy, and will also slow the advancement of e-mobility in the region. A path toward an e-mobility future that incorporates V2G when the technology is available at scale is even more challenging under current power market structures. The single-buyer model (SBM) characterizes the Arab region power sector, and the dominant variant of the model in most Arab countries is vertical integration of power generation, transmission, distribution and supply all under the control of the utility. Utilities are mostly State-owned enterprises (SOEs), with private sector engagement typically limited to the power generation sector, meaning the Government is ultimately the single electricity buyer. The third and related salient attribute of the power sector model is the tariff structure. A report by the International Monetary Fund in 2019 noted that energy subsidies in the Middle East and North Africa (as they define the region) constituted approximately 13 per cent of GDP. Chatham House notes that electricity subsidies “play an increasingly important role, either via tariffs that lie below the cost of production, or through the use of low-priced fossil fuel inputs for power generation”. In 2020, electricity subsidies among Arab countries were greatest in Saudi Arabia ($4.6 billion), Egypt ($2.6 billion), Kuwait ($1.9 billion) and Algeria ($1.4 billion). Multiple forces today are driving Arab countries toward power market restructuring. These include the heavy burden on public finances from subsidizing energy, soaring electricity consumption, projected declines in oil export revenue and the need to recover the high capital costs of renewable energy plans. New, more liberalized market models will over time enable the region’s utilities to operate the type of grids necessary for large-scale variable renewable energy generation, transmission and distribution as well as for a V2X e-mobility future. Only when these power sector reforms are implemented will Arab countries be able to operate the grids that they and other countries need for such a future. They have been described as “adaptive grids – the coming dual network of energy and information flow that unleashes pricing and market forces to optimally and dynamically facilitate the matching of energy supply and demand”. They are “grids in which electricity is transported bidirectionally, traded at (relatively) dynamic prices, and generated and consumed under human-tailored agential control”. While bidirectional V2G/V2X infrastructure and utilization still are very limited, globally, even unidirectional V1G smart charging “needs the existence of an attractive energy trading policy between the EV owners and the power utility”. V1G is already implemented in many countries around the world. It relies, as V2G does, on a power market structure that financially incentivizes owners through revenue in the form of savings or rebates on their energy bill to charge EVs during non-peak hours. Bidirectional V2G provides an even greater range of ancillary services to the grid, but V1G also benefits the utility through power grid regulation (preventing grid overloading) and providing spinning reserve (unused capacity to compensate for power shortages). In exchange, the utility must be able to provide EV owners revenue based on the amount of time each makes those services available. In an accommodating power market structure, the utilities of Arab countries could control the timing of charging of EVs remotely according to the needs of the grid, enabling financial benefit to themselves and EV owners. One study estimated that this kind of V1G-enabled load shifting, if implemented in California, would equate to $1 billion in value over a decade to 2030. In more fully liberalized Arab power markets in the future, V1G could pave the way for eventual bidirectional V2X innovations to enable the “virtuous circle”.

5. An opportunity for the Arab region to take steps toward a pioneering e-mobility model

If approached as a deliberate, integrated and mutually supportive objective of the transport and energy sectors and ministries of Arab countries, the advancement and scaling of e-mobility can help facilitate the transition to renewable energy, and vice versa. Grid modernization is essential to both aims, and e-mobility can be not only a beneficiary of that, but also a spur to expansion and modernization of grid capacity. Increased numbers of electric cars, buses and other forms of mobility will be one source of the increased stress on the grids in the region. But with appropriate grid modernization and power market restructuring, V2G could make those vehicles pivotal to a dynamic management of supply and demand that will help grids integrate much more variable renewable energy into their energy mix. That on-demand clean energy could be used to power houses, buildings, industrial operations and more. EVs capable of V2X could improve reliable electricity for parts of the populations that lack it in the countries of the region. They can also be a source of economic benefit for private owners and fleet operators. It would be a leading-edge innovative e-mobility future for Arab countries and their peoples.

C. Key challenges in pursuing this e-mobility pathway

Progression on this pathway to an Arab region e-mobility future faces some key challenges that are foreshadowed in the preceding narrative.

1. Barriers to power market restructuring and tariff reform

In the Arab region, power sector reforms are slow and typically happen more in response to crisis than proactively. The reasons for maintaining single-buyer models and electricity subsidies are socio-political as well as economic. Across Arab countries, States are supported by fossil fuel rents and subsidies, which in some cases are seen as critical to the stability of social and governance structures. Even in countries that are not petroleum rich and rely heavily on fuel imports, the inability to provide affordable energy has prompted Governments to support subsidies. And as subsidies fall within the social contract, their elimination poses risks of social unrest. Fiscal pressures on budgets are a major incentive for Arab region Governments to embark on structural changes to their power sectors, including changing subsidy/tariff phase-outs, but doing so comes with risks. These risks and barriers notwithstanding, renewable energy transition commitments and the global shift away from fossil fuels demand structural reforms to power markets. This e-mobility pathway and other e-mobility pathways in the region do as well.

2. V2G is in its infancy

The benefits of bidirectional energy exchange between power grids and e-vehicles of all types are clear, but as yet the ability to obtain these benefits is far from realized anywhere in the world. The obstacle is not in terms of V2G technology, which requires further maturation but at an essential level is proven. It is more in terms of the implementation. Today, V2G is not operationally implemented at scale anywhere, but rather is in trials in approximately 50 projects globally (25 in Europe, 18 in North America, 7 in Asia). Only a few EV makes and models are currently V2G capable, but multiple global automakers have announced plans for some or all of their future models. The Arab region cannot control the pace and scale of V2G by automotive or infrastructure technology developers. But decision makers in the region can and should take steps in the nearer term to be ready to implement V2G when the implementation is available in the longer-term future.

3. High cost of grid modernization and charging infrastructure buildout

The charging infrastructure necessary for e-mobility at scale will be a vast cost for the Arab region, if we consider it as a proportion of total Bloomberg projections of $600-900 billion by 2040. Investment requirements for grid modernization to enable the renewable energy transition and e-mobility at scale may be comparable. Where this capital will come from is a critical question for Arab region Governments, especially as oil export revenues decline. At the same time, these investments also will be critical to enable the green economies that all countries of the region aspire to. Those new economies will generate significant public revenues over time if they are enabled with the infrastructure they require. 4. Social barriers to V2G take-up There are considerable social and personal emotional barriers to EV adoption in any future e-mobility pathway, including this one. Many have to do with “range anxiety”, meaning concerns that vehicles will not have power when needed, due to the vehicles’ perceived technical inadequacies and/or the unavailability of sufficient charging infrastructure. In this pathway to an e-mobility future, other concerns are added to this baseline which must be addressed. Prospective EV owners may fear the utilities’ control over charging timings and patterns or may perceive the V2G process as burdensome. Revenue to EV owners for the services they provide to the grid will mitigate this risk. But communications campaigns will also be necessary to overcome these and other social barriers, to EV use in general and especially to EVs in a V2G future.

Work with multilateral development banks and other international development and climate finance institutions to secure concessional and blended finance for grid expansion and modernization projects

Meeting the region’s renewable energy, climate change adaptation and e-mobility goals will require immense investments in the grid infrastructure and new financing models for grid expansion and modernization. As the power network in Arab countries is publicly owned, grid investments have predominantly depended on public spending. Yet, pressure on public budgets and financial constraints in most countries have led to grid under-investment, creating major bottlenecks for the energy transition. Financial assistance is a priority need and must be sought, in the form of concessional loans, blended finance and climate funds to drive capital for the necessary grid infrastructure. The eligibility criteria and key performance indicators for such projects should be tailored for the current grid and power generation status in countries. Special vehicles should also be put in place for low-income and conflict countries, considering their lower ability to tap into private financing.

Revise legal, policy and regulatory frameworks to restructure power markets, increase private participation and develop multi-producer and multi-buyer models

The e-mobility and renewable energy transition goals of Arab countries will be difficult to achieve under currently dominant power market structures characterized by vertical integration and a single-buyer model. These structures hinder the advancement of an electric mobility paradigm in which vehicles export electricity back to the power grid and to other powered devices and infrastructure. Arab countries should move towards a multi-buyer model. This reduces the risk of the single buyer not having the necessary credit rating to sign off-take agreements or facing delays in auctioning renewable energy projects and power purchases. Depending on the country, unbundling to allocate responsibilities for electricity generation, transmission and distribution to distinct entities operating independently, and a move towards market-based structures, will require defined legislation. Such legislation would provide a legal mandate for restructuring and allow participation of multiple entities in the sector, establishing or restructuring grid operators and electricity regulatory bodies. Additionally, increased private sector participation and appropriate legal, regulatory and policy frameworks and grid codes are all prerequisites for a more competitive market. Given their size and purchasing power, one priority could be to facilitate public transport authorities in negotiating and implementing renewable power purchase agreements (PPAs) with terms allowing for the sale of excess energy back to the grid.

Eliminate subsidies and implement time-of-use tariffs for electricity

Electricity and fossil fuel subsidies have not only led to wasteful energy consumption and strained utilities and government budgets. They have also hindered the deployment of low-carbon technologies, including renewables and EVs. As part of electricity tariff restructuring, demand response pricing would be one key to making e-mobility actually an enabler of increased grid resilience and the region’s overall renewable energy transition. It would also help manage the impact of increased EV adoption on electricity demand. Incentivizing customers to consume energy when the production cost is low (off-peak) and disincentivizing when the cost of generating electricity is high (on-peak) has the potential to become two of the most cost-effective demand flexibility measures. They will also help enable the integration of a high share of variable renewable energy. This will require shifting from dominant flat electricity tariff schemes, which provide no incentives for end users to reduce consumption during peak hours, to a time-of-use (TOU) tariff scheme instead. In some Arab countries, the time-of-use model is applied for some industrial consumers. Utilities and/or regulators should adopt TOU pricing for other consumer categories as well.

Ensure that grid modernization and expansion efforts incorporate technologies and operational and other steps necessary to enable bidirectional charging of EVs

Investing in vehicle-to-grid charging can be a major way for utilities to reduce their carbon footprints, balance supply and peak demand, defer investments, avoid grid congestion, improve grid stability and gain other important operational and financial positives. As described throughout this report, building a sufficient number of charging stations is one of the most urgent priorities, globally, to make possible the projected and desired increases in EVs of all types. The buildout of this infrastructure in Arab countries is at an extremely early stage, but plans and investments are underway. Examples include Dubai’s “EV Green Charger” initiative, an Egyptian public-private joint venture to locally manufacture charging stations and others. Governments in the region should examine the current low levels of charging infrastructure for the degree of opportunity it might present to prioritize bidirectional-capable stations before significant sunk costs have been incurred for unidirectional technology. This “leapfrogging” strategy could be reflected in plans for procuring and installing public charging stations; financial incentives for consumers and businesses to purchase and install the currently more expensive bidirectional chargers at homes and commercial properties; standardizing codes and requirements for charging infrastructure and processes; simplifying permitting for charger sites and ensuring that permitting regulations do not hinder future deployment of bidirectional chargers; adopting innovative financing models such as carbon credits to support the buildout of the more costly bidirectional-capable infrastructure; and more. As EV charging infrastructure is eventually built out in the least developed and conflict-stricken Arab countries, making it bidirectional capable can be of particular value given the ability of batteries and other energy storage systems to enable utilities to defer upgrades of their transmission and distribution networks and reduce the scale of investment needed for grid modernization.

In each Arab country, form an e-mobility working group with a designated “national champion” to coordinate and integrate transport-related, environment, energy, telecommunications and infrastructure policies for mutual benefit and promotion of mutually supportive renewable energy transition and e-mobility objectives

Aligning policy objectives and action plans across the transport, climate and environment, energy and public works sectors will help meet symbiotic targets for e-mobility, the energy transition and grid modernization. Mitigating often-conflicting agendas is essential, as policies across each sector are often segregated and coordination across corresponding institutions is often absent. Identifying areas of mutual benefit and potential divergent points is a first step to ensuring closer alignment in policymaking. Subsequent steps should craft policy options that are cross-sectoral, such as e-mobility action plans that optimize the impact on power demand with grid, storage and system flexibility benefits; packaging investment plans to maximize private sector participation in grid modernization, charging infrastructure buildout and EV fleet procurement; and other synergies. Coordination is especially needed in low-income countries and countries in conflict, and in rural areas, where balancing power supply and demand is already a challenge even prior to EV integration. Inter-ministerial committees should be established within each country to facilitate such high-level policymaking discussions. Stakeholder coordination committees should then be formed across corresponding departments and institutions to identify the actions plans and follow-up. These coordination committees should also include grid operators and technical planning experts to adopt grid codes and standards for vehicle-to-grid integration. The outcomes should be made available for consultation with and from institutions in the private sector, the research and development sector and academia to ensure their early engagement in the process and their buy-in of the proposed projects.

Provide financial support or policy incentives to encourage transport service providers including mobility-as-a-service providers to adopt V2G-capable EV fleets and charge on certain schedules

Steps should be taken to turn the cyclical electricity demand of EV-equipped transport service providers (public transit systems, cargo shippers, MaaS providers) into a public benefit. Some of these fleets tend to have lower plugins during the day when intermittent solar is abundant and grid congestion is higher. It will be important for supply/demand management to ensure that a certain number of them are connected and charging during these “peak supply” times rather than peak demand hours. This can happen through the proposed tariff restructure and established partnerships with large EV fleet owners to incentivize them to adopt V2G-capable vehicles and connect a share of their fleets to the grid at specific times. This will also create opportunities for innovation and entrepreneurship, such as developing aggregators and third parties to manage the connected loads per grid operators and utilities’ needs.

Develop and deploy communications campaigns that incorporate Arab region success stories and other means to overcome social and other barriers to EV adoption and V2G charging models and inform strategies for overcoming these barriers

Consumers will need to be persuaded and incentivized to adopt EVs, in general and also to participate in V2G. Range anxiety concerns are mostly technology-risk related and stem from a lack of awareness of several factors. These include awareness of the technologies involved, the financial and other benefits they can provide to consumers and the mechanisms that can protect against perceived risks to consumer needs and convenience. Consumers will be wary of their EVs being unable to get them where they want to go, fearful of losing capacity or power or concerned about how long it will take to recharge their battery. They also may have concern about potential wear and tear of their EV’s battery with its energy going back and forth to the grid, especially in the high temperatures that characterize Arab countries. In V2G, consumers will expect to be compensated for not only the energy itself, but also the value of the flexibility they provide, and may fear the whole model is too complex or risky. Addressing all these concerns and expectations will need early consumer engagement, with structured and extensive public awareness and public relations campaigns that include pilot projects to overcome such barriers.

A. Recommendations that apply to all three e-mobility pathways described in this report

In Sections 3 through 5 above, we provided recommendations that are distinctly valuable for how they support the particular “vector” that e-mobility takes in each of those report sections. They are: complementary development of electric public transportation and e-micro-mobility and MaaS; development of e-mobility industry supply chain capacity; and leveraging e-mobility as an enabler of grid modernization and the renewable energy transition. Those recommendations are among the actions that are important for Arab decision makers to begin working on in the near term in our assessment. A number of recommendations in Sections 3 through 5 support all three of the e-mobility pathways we analysed, and would support any and all other pathways that the e-mobility trend could take in the Arab region. That cross-cutting integrative set of recommendations, with abbreviated descriptions drawn from the fuller descriptions in the individual pathway chapters, is provided below.

1. Develop a national sustainable urban mobility policy in each country of the region, with capacity-building support as needed, to shift car drivers to more efficient and non-carbon producing forms of transportation

Decision makers of the transport, energy, environment and planning ministries of regional countries should review available models for such plans, confer with peers in countries that have employed them, then create a NUMP/SUMP for their country.

2. Provide grants, loans and/or subsidies from appropriate levels of government and aid agencies, and explore multilateral development bank funding, for urban redevelopment projects and other projects that purposefully integrate public transportation, electric micro-mobility and MaaS

New forms of finance should be made available on a priority basis for projects that are designed to integrate the “big end” of the land e-mobility spectrum (e-buses and electric rail systems) and the “small end” (e-micro-mobility and MaaS EVs). Financing mechanisms from multilateral development banks and climate finance institutions should be among the approaches explored.

3. Establish national and regional standards requiring interoperability in charging infrastructure, especially for charging points deployed for public transit systems

Mandating interoperability for the infrastructure powering EVs in the Arab region will be essential to scaling the adoption of e-mobility. Ideally, common standards for interoperable charging should be adopted region-wide.

4. Set ICE vehicle phaseout deadline mandates in all Arab countries that include all buses and other vehicles in the public transportation sector

Arab countries should establish their target dates and define the scopes of their future bans to include all public transportation vehicles. Where possible, financial and other incentives should encourage owners to accelerate the replacement of their ICE vehicles to get legacy stock off the country’s roads and recycle components.

5. Establish a coherent and consistent policy framework with clear strategic goals, incorporating economic, fiscal and other types of policy levers, to stimulate Arab markets for e-mobility and reduce investment risk for current and aspiring manufacturers and suppliers in the region

Governments in the region can stimulate demand for EVs through a variety of policies, advancing the trend of e-mobility overall as well as the more specific aim of growing local e-mobility industries. Greater regional demand for electric cars and other EVs could motivate local companies to start or grow existing businesses across the automotive and broader mobility value chains, and stimulate global automakers to respond to the growth of markets with increased supply.

6. Emphasize mobility sector-relevant skills development in national and other education and training initiatives supporting economic diversification

All Arab countries have plans and visions in varying forms for diversifying their economies over the next 5 to 30 years that include initiatives to improve education systems and provide skill training for citizens. In such programmes, skills relevant to the electric and digitalized future of mobility should be emphasized, which will also be valuable in helping countries diversify into numerous other digital industries.

7. Prioritize the battery and charging station elements of the e-mobility supply chain as areas of focus for industry capability and capacity development in the region

Increased battery production and battery technology advancement, and increases in charging infrastructure production and deployment, are the lynchpins for the future of e-mobility. Investments by Arab countries and companies to develop the capability to serve these essential requirements will be important in helping e-mobility scale in the region as well as having the potential for significant local job creation.

8. Work with multilateral development banks and other international development and climate finance institutions to secure concessional and blended finance for grid expansion and modernization projects

Meeting the region’s renewable energy, climate change adaptation and e-mobility goals will require immense investments in the grid infrastructure. Financial assistance in the form of concessional loans, blended finance and climate funds to drive capital for the necessary grid infrastructure is a priority need. Eligibility criteria, key performance indicators and special vehicles for such projects should be tailored for the current grid and power generation status in each country.

9. Revise legal, policy and regulatory frameworks to restructure power markets, increase private participation and develop multi-producer and multi-buyer models

The e-mobility and renewable energy transition goals of Arab countries will be difficult to achieve under currently dominant power market structures characterized by vertical integration and a single-buyer model. These structures hinder the advancement of an electric mobility paradigm in which vehicles export electricity back to the power grid and to other powered devices and infrastructure. Arab countries should move towards a multi-buyer model. Additionally, engaging and increasing private sector participation through the creation of an enabling environment, adequate policies and favourable regulations are prerequisites for a more competitive market.

10. Ensure that grid modernization and expansion efforts incorporate technologies and operational and other steps necessary to enable bidirectional charging of EVs

Building a sufficient number of charging stations is one of the most urgent priorities, globally, to make possible the projected and desired increases in EVs of all types. The buildout of this infrastructure in the Arab region is at an extremely early stage, but plans and investments are underway. Governments in the region should examine the current low levels of charging infrastructure for the degree of opportunity it might present to prioritize bidirectional-capable stations before significant sunk costs have been incurred for unidirectional technology.

11. In each Arab country, form an e-mobility working group with a designated “national champion” to coordinate and integrate transport-related, environment, energy, telecommunications and infrastructure policies for mutual benefit and promotion of mutually supportive renewable energy transition and e-mobility objectives

Aligning policy objectives and action plans across the transport, climate and environment, energy and public works sectors will help meet symbiotic targets for e-mobility, the energy transition and grid modernization. Identifying areas of mutual benefit and potential divergent points is a first step to ensuring closer alignment in policymaking. Subsequent steps should craft cross-sectoral policy options. Inter-ministerial committees and stakeholder coordination committees should be established in each country.

12. Develop and deploy communications campaigns that incorporate Arab region success stories and other means to overcome social and other barriers to EV adoption and V2G charging models and inform strategies for overcoming these barriers

Consumers will need to be persuaded as well as incentivized to adopt EVs, in general and also to participate in V2G. Addressing all these concerns and expectations will need early consumer engagement, with structured and extensive public awareness and public relations campaigns that include pilot projects to overcome such barriers.

B. Considering recommendations across Arab country groupings

The recommendations in this report are important in different ways and to different degrees to all Arab countries if they are to successfully make e-mobility part of their future at scale. Recognizing differences in economic, governance and other conditions throughout the region demands assessment of the feasibility and difficulty of implementing the recommendations for different countries and groupings of countries. The framework for our assessment is institutional capacity, meaning the relative ability of Governments and societies to plan, organize and implement programmes to advance goals. Financial resources and the effectiveness of governance and programme implementation mechanisms are the two primary elements of institutional capacity in this assessment. Governance and programme implementation effectiveness have to do with the ability to enact policies, legislation and regulation, and the degree to which public and private sector entities in that country have the expertise, experience and depth to successfully manage programmes that follow from such policies and laws. Countries are grouped into categories based on their capacity. Very high-capacity countries are those with very high income and highly effective governance. These countries can move expeditiously in passing new legislation and regulations, making the required investments and coordinating both domestic and international engagement in their countries to implement of all the recommendations provided in this report. High capacity countries are those with a combination of fairly high income and generally effective governance. These countries can efficiently enact policies and laws, have sufficient resources to take on new priorities like those related to e-mobility and have effective engagement with domestic and international stakeholders to play necessary roles in implementing potentially all of the recommendations. Medium capacity countries are middle income countries that have to steward scarce resources carefully and that have more challenging governance environments. These countries are assessed as capable of undertaking most of these recommendations but may need to make trade-offs to ensure effective implementation and long-term sustainment of those they designate as the most urgent priorities. Low capacity countries are those in significant distress facing various conditions of state fragility, financial hardship, political uncertainty and/or challenges to popular support. For these countries only a relatively small number of recommendations are assessed as feasible for implementation, at least in the near to mid-term. For some very low capacity countries, none of the recommendations may be feasible until conditions improve considerably. Implementation capacities and realities ultimately will have to be assessed on a country-by-country and recommendation-by-recommendation basis. The matrix below provides the assessment of recommendations by country grouping. A circle represents assessed ability to implement.

A fundamental, irreversible shift in the paradigm of transportation is underway. In coming decades, the dominant trend in this transformation is e-mobility – the accelerating growth of electric powered cars, vans, buses, scooters, trains and eventually ships and aircraft. Given its diversity, the Arab region has the potential to pursue a variety of paths and approaches to e-mobility. Countries throughout the region have already made significant steps and pledges to adopt EVs and develop e-mobility industrial capability. This report has explored three different potential pathways that e-mobility could take in the Arab region over the next two decades and beyond. Drawn from the report are key findings, key messages and recommendations, organized by type of recommendation. Some policy and legislative recommendations and some technical recommendations encompass an investment dimension. Each of the recommendations supports the Sustainable Development Goals (SDGs). Given the high priority Arab nation governments and other sectors place on the SDGs, linking these e-mobility recommendations to SDG strategies and investments will be valuable to help advance them. Each recommendation notes a supporting linkage to one or more SDGs.