Skyworth Automobile and Saudi Arabia's KAG Group's "Ten-Year Pact"

Skyworth Automobile states that KAG Group's main business areas include automotive transportation for the Saudi royal family, new energy vehicles, data analysis consulting, and urban infrastructure. This partnership encompasses a wide range of new energy products, including passenger vehicles, supercharging stations, and smart living solutions. KAG Group will become Skyworth Automobile’s exclusive partner in Saudi Arabia.

The new KD factory is part of Skyworth Automobile’s strategy for internationalization, aimed at expanding its influence in global markets through local production and assembly. The production model at the KD factory allows Skyworth to export disassembled vehicles as parts and then assemble and sell them in Saudi Arabia. This approach helps reduce transportation costs and import duties and may give the company an advantage in local procurement policies.

Although Skyworth Automobile continues to push forward in the new energy vehicle sector, its sales in the Chinese market are not prominent, facing significant challenges. Deciding to establish a factory abroad can be seen as a strategic adjustment to sidestep the intense competition among domestic new energy vehicle companies and to cope with market pressures at home, maintaining the company’s vitality.

Furthermore, Saudi Crown Prince Mohammed bin Salman's "Vision 2030," introduced in 2016, aims to diversify the Saudi economy through investments and partnerships, reducing dependence on oil, and striving to become a hub for the Arab and Islamic world, as well as a global investment and regional transportation nexus. Under this policy direction, Saudi Arabia shows particular interest in international partners, especially Chinese new energy vehicle companies. However, China's leading new energy vehicle companies rarely accept significant investments from Saudi Arabia, with more common scenarios involving strong collaborations with global enterprises like "Xpeng-Volkswagen" and "Leapmotor-Stellantis." The contract between Skyworth Automobile and KAG Group only mentions a "ten-year strategic cooperation" without detailing KAG Group's investment size or how the partners will allocate funds needed for overseas investments. In the competitive Saudi automotive market, with a high market share of traditional fuel vehicles and early entries by BYD, Geely, and Lynk & Co among others, the battle for the Middle Eastern new energy vehicle market is just beginning. As of the end of 2023, a total of 9 Chinese automobile companies and 13 new energy vehicle brands have launched approximately 20 new energy vehicle models in the Middle East. With this backdrop, the future of Skyworth Automobile remains shrouded in uncertainty.