Tesla’s Saudi Arabia entry puts ‘funding secured’ feud to rest

Tesla will face competition in the Saudi market from Chinese carmakers, whose models are popular with locals, as well as Lucid, which opened a final-assembly plant in the kingdom in September 2023. File Photo: A Tesla Inc. logo at the company’s showroom in Lisbon, Portugal, on Saturday, April 5, of 2025. Photographer: Goncalo Fonseca/Bloomberg
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Goncalo Fonseca

Tesla Inc. is opening up shop in Saudi Arabia in the latest sign Elon Musk has put to rest a once-bitter feud with one of the kingdom’s most powerful men.

The company will showcase its model lineup, plus prototypes of its Cybercab and the humanoid robot Optimus, at a launch event Thursday in Riyadh. Tesla has offered little detail about its broader plans, but at least one showroom appears to be under development in the capital.

Tesla’s entry into Saudi Arabia is a fresh signal Musk has mended relations with the kingdom after a spat with Yasir Al Rumayyan, head of the $925 billion Public Investment Fund. The two had a falling out after Musk tweeted in August 2018 that he had “funding secured” to take Tesla private on the basis of preliminary talks he’d had with Al Rumayyan.

Those discussions fell apart over a series of tense text messages that were later made public as part of a lawsuit alleging the Tesla chief executive had defrauded investors. Although Musk ultimately was cleared, the PIF sold off its Tesla holdings and poured billions into rival electric-car maker Lucid Group Inc.

The first indication the two appeared to have mended fences came in October, when Musk made a surprise virtual appearance at Saudi Arabia’s flagship investment conference, where Al Rumayyan was seated in the front row. Musk was then seen with the PIF boss and US President Donald Trump at a UFC match in New York in November, and attended a Saudi summit in Miami in February.

For Saudi Arabia, welcoming a new US automaker could be seen as a further show of good faith toward Trump and his America First agenda. For Tesla, its entry is indicative of goodwill toward the Saudis and a signal the company sees growth potential in the kingdom as it battles a brand crisis and sales slump elsewhere.

“With Tesla sales down 13% year-over-year in the first quarter, any new market Tesla can enter will help,” said Seth Goldstein, an equity strategist at Morningstar.

Gene Munster, managing partner of Deepwater Asset Management, estimates Tesla could deliver 30,000 vehicles a year in Saudi Arabia after one or two years in operation. Its long-term growth prospects will still be dependent on the US, China and Europe, he said.

Tesla will face competition in the Saudi market from Chinese carmakers, whose models are popular with locals, as well as Lucid, which opened a final-assembly plant in the kingdom in September 2023. The PIF is the Newark, California-based company’s top shareholder and just participated in a $1 billion offering of convertible senior notes this month.

The PIF has made repeated cash infusions in Lucid as Saudi Arabia seeks to create its own domestic auto manufacturing hub and have EVs account for roughly a third of cars on the road by 2030.

For all its efforts, EV sales still account for just over 1% of overall sales, according to PwC. While more than 40% of Saudi consumers say they’d consider buying an electric car in the future, adoption will be challenged by affordability, limited infrastructure and risks related to high temperatures, the consultancy says.

The PIF was among the backers of Musk’s xAI in a funding round — an investment that hasn’t been publicly disclosed, Bloomberg has reported. It also owns a chunk of Kingdom Holding Co., a firm run by Saudi billionaire Prince Alwaleed bin Talal, that was among Musk’s backers when he took Twitter Inc. private. The firm later backed xAI, which Musk is combining with the company now called X.

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