LCID - Middle East's $9 Billion EV Opportunity Reaffirms Potential In These Stocks
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The Middle East, aregion long known for its oil and gas riches, is transitioning to anew, more sustainable future, potentially dominated by electricvehicles.
TheUAE, for instance, has launched several initiatives over the pastyears to encourage the adoption of EVs among its residents. Strategieslike the Dubai Green Mobility Strategy 2030 aim to have around 42,000electric cars on Dubai’s streets by the end of this decade.Currently, the UAE is ranked 7th globally and is the top country inthe MENA region on the Global Electric Mobility Readiness Index(Gemrix), demonstrating the nation’s dedication to sustainabletransportation and its goal of achieving carbon neutrality by2050.
Like theUAE, the Saudi government has also taken significant steps to drive EVadoption, including funding infrastructure. Since 2021, the SaudiElectric Vehicle Charging Infrastructure Development Initiative(SEVCIDI) has been working towards a goal of installing 50,000domestic charging stations by 2025.
According to analysts, EV adoption will gain majormomentum in the Middle East thanks to growing tech-savvy urban hubs inSaudi Arabia and the UAE, in addition to a significant drop in thecost of EVs over the past years.
With EV sales looking set to continue ramping up,here are four stocks that seem well positioned to capitalize on theregion’s growth.
VivoPower International PLC (NASDAQ:VVPR) , asustainable energy solutions (SES) company, is on a mission to makethe cost of owning an EV much more affordable without compromising onany of the features. The company’s flagship subsidiary, Tembo e-LV,supplies conversion kits containing all the parts needed to convert avehicle from an internal combustion engine to electric. These partsinclude the batteries, an e-motor, a reduction box, a charger,software, and many other components that make the converted vehiclework safely and seamlessly.
In essence, the Tembo electric utility vehicle(EUV) conversion kits will transform new and second-handdiesel-powered 4x4 LandCruiser and Hilux vehicles into ruggedized EUVsthat can operate in the harshest of terrains, like in mining and otherindustrial applications.
Tembo’s conversion kits have seen significant interest fromnot only the Middle East but also the African market, as illustratedby its recent securing of a commitment of 5000+ kits and an orderpipeline of 10,000+ kits. Those included an MOU in Jordan for 1,000kits, opening a path to the Middle East, which is the largestLandcruiser market, and a definitive agreement in Kenya for 4,000kits, providing entry into second-hand vehicle segments, which expandsthe company’s addressable market.
To put the opportunity in context, the Middle Eastand Africa EV markets were worth about $3.33 billion in 2024 and areexpected to reach $9.42 billion by 2029, representing a CAGR of23.20%, according to research from Mordor Intelligence. VVPR is wellpositioned to capitalize on this growth and has what could possibly beone of the best backers to help advance in the region. That is becauseearlier this month, Vivo received a direct investment of $10 millioninto Tembo at a pre-money valuation of $120 million, from a privateinvestment office of a member of the ruling Al Maktoum family ofDubai.
At themoment, VVPR has a market cap of about $12.5 million, which impliesthat its valuation has significant upside potential even withouttaking into account its other subsidiaries, which it is divestingfrom.
Just thisweek, VivoPower International PLC (NASDAQ:VVPR) announced thatit entered into a definitive asset sale agreement for the sale of oneof its non-core business units, Kenshaw Electrical, to ARA GroupLimited, a leading diversified industrial services group based inAustralia, for a total of A$5 million. This follows anotherannouncement that it would spin off the majority of its Caret businessunit’s portfolio, representing up to ten solar projects totaling 586MW-DC at varying stages of development.
This is in line with VivoPower’s previouslyannounced strategy to focus on reinvesting in its strong growthbusinesses, including Tembo.
It is also important to note that Tembo will begoing public via a merger with Nasdaq-listed SPAC Cactus AcquisitionCorp. (CCTS). CCTS will issue 83.8 million shares in exchange forTembo shares at $10 per CCTS share, which corresponds to a pre-moneyindicative equity valuation of Tembo of $838 million.
VivoPower shareholderswill get 5 Tembo shares worth $10 each for every share held, inaddition to a special dividend at $1 per share, translating to another$5 per VivoPower share held.
This deal has the potential to unlock significantshareholder value since even if the Tembo share price upon IPO is only$1, this implies a per share valuation for VVPR of $28, including thevalue of dividend shares.
VinFast Auto Ltd. (NASDAQ:VFS) marked asignificant milestone in its global expansion strategy by enteringinto a dealer sales agreement with Bahwan Automobiles Trading LLC(BAT) for the distribution of electric vehicles (EVs) in Oman. Thiscollaboration not only introduces VinFast's presence in the MiddleEast but also underscores the company's commitment to promotinggreen mobility solutions worldwide.
The deal follows an Initial Memorandum ofUnderstanding for Cooperation signed at the COP 28 conference in theUnited Arab Emirates (UAE) in 2023. It makes BAT the official dealerof VinFast in Oman. Under the agreement, BAT is to establish 13VinFast stores and service locations over the next three years.
The first store isexpected to launch in mid-2024, with vehicle sales commencing shortlyafter. VinFast will also collaborate with BAT to introduce four e-SUVmodels in the Omani market: VF 6, VF 7, VF 8, and VF 9.
Mr. Ta Xuan Hien, CEOof VinFast Middle East, said: "Oman presents a promising marketfor electric vehicles, as consumers in the nation demonstrate agrowing interest in sustainable and environmentally friendlytransportation solutions. We are confident that this dealer salesagreement with BAT, a leading and highly reputable dealer in Oman,will empower VinFast to swiftly establish a presence in the market andprovide customers in the country with the most diverse andhigh-quality selection of electric vehicles available."
NWTN(NASDAQ:NWTN) is a Dubai-based pioneering green energy companydedicated to providing passenger-focused, premium electric vehicleproducts and green energy solutions to customers worldwide. Thecompany has a full vehicle assembly facility in Abu Dhabi.
In January this year,NWTN’s strategic partner, W Motors, a leading manufacturer ofhigh-performance luxury cars in the Middle East, signed a partnershipagreement with Manaseer Group.
Through this agreement, Manaseer Group will be theexclusive distributor for W Motors and NWTN vehicles in Jordan and theMiddle East and Africa region. It will use its facilities as a factoryfor assembly and thereafter manufacturing operations for these new carbrands, which is made possible by Manaseer’s strong presence andexpertise of the Jordan market, and its commitment to providingenvironment-friendly solutions that combine innovation andluxury.
Theagreement was reached following Manaseer Group's recentparticipation in the Higher and Executive Committees for IntegratedIndustrial Partnership meeting that took place in Bahrain. ManaseerGroup’s Vice Chairman Eng Abdel Rhman Obaid said: "We are proudto have represented Jordan in the Higher and Executive Committees forIntegrated Industrial Partnership meeting and to contribute to theindustry's development in Jordan and the region, as we believe inour role in the industrial sector empowerment.”
Lucid Group, Inc.(NASDAQ:LCID) officially opened the first-ever car manufacturingfacility in Saudi Arabia last year, making it its second AdvancedManufacturing Plant (AMP-2) and first international plant. Thefacility will produce Lucid's groundbreaking electric vehicles forSaudi Arabia and export them to other markets.
The AMP-2 facilityreceived significant support from the Ministry of Investment of SaudiArabia (MISA), the Saudi Industrial Development Fund (SIDF), and theEconomic City at King Abdullah Economic City (KAEC) and is expected toplay a pivotal role in accelerating Saudi Arabia's strategic goalto diversify its economy.
The AMP-2 facility has begun semi knocked-down(SKD) assembly and is expected to have an annual capacity of 5,000cars. The initial operation re-assembles Lucid Air vehicle'kits' that are pre-manufactured at the company's U.S.AMP-1 Manufacturing Facility in Casa Grande, Arizona. Lucid aims totransition AMP-2 to complete build unit (CBU) production after themiddle of the decade, with an additional annual capacity of 150,000cars.
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