3 reasons why MENA is not ready for Tesla
* Large parts of MENA region are still struggling with basics
* Many countries in region don’t have the necessary infrastructure
* High cost of such vehicles may be another hindrance
Tesla, the manufacturer of autonomous electric vehicles, made headlines this week when it announced a market debut for the Middle East region, through Dubai.
And buying has already started. The emirate’s Roads and Transport Authority (RTA) signed on Monday an agreement on the sidelines of the World Government Summit to buy 200 Tesla vehicles. The vehicles would be fitted with multiple autonomous driving technologies.
Tesla also started accepting online orders through its website, with initial deliveries expected this summer.
The company also opened a pop-up store in Dubai Mall, the world’s largest shopping centre, allowing potential buyers to experience Tesla and learn about benefits of ownership. In addition to its Dubai activities, the automaker plans to open a store and a service centre in Abu Dhabi by 2018.
These moves seem to signal the major advent of autonomous vehicles in the UAE and the wider MENA region, but are we really ready?
No room for growth
Tesla’s announced activities are currently limited to the emirate of Dubai and near-future plans include the UAE as a whole, but it has not yet announced any plans for other countries in Middle East, or the larger MENA region. While Musk said there are plans to expand to other Gulf countries, nothing has been officially announced.
However, the UAE is relatively small market in size compared with the larger MENA region. Apart from a few neighbouring countries still benefitting from oil dollars, many other nations in the MENA region is still struggling with basics; either picking up the pieces from political uprisings, or embroiled in civil war and terror threats, making them not the greatest markets in terms of opportunity.
This could well be the reason why Musk kept the MENA region as a stop after China, as the latter was more of a priority.
Tesla also brought its sophisticated Supercharger and Destination charging network to the emirate. It opened two Supercharging locations at The Last Exit in Jebel Ali and in Masdar City, allowing drivers to recharge their vehicles in minutes rather than hours. UAE is already home to a number of Tesla’s Destination chargers, which are available at 26 locations across the UAE, including hotels and shopping malls.
By the end of the year, Tesla will open five additional Supercharger locations, enabling long distance travel across every route into and out of the country.
As we have the UAE’s sophisticated infrastructure, including smooth roads and services needed for maintaining and operating the charging centres, such luxuries don’t exist in other MENA countries.
Some countries are just now looking to overhaul their infrastructure, such as Kuwait which announced projects worth $15.6 billion for financial year 2017-2018, or Lebanon, which just received $200 million from the World Bank Group for road repairs.
Other countries also suffer from deadly infrastructural roadblocks that cannot be solved through a few projects, but rather need a comprehensive urban development plan and time for execution, such as Egypt, with its traffic clogs and overpopulation.
Tesla made its regional debut with two flagship cars, Model S and Model X, priced at AED287,000 and AED356,700 for the basic models, excluding taxes and government fees, according to Tesla’s website.
While the UAE has one of the highest GDPs in the Arab world, estimated by the World Bank at $370bn in 2015, other countries lag behind as they struggle with political and economic instability.
For instance, Lebanon’s GDP stands at $47bn, Jordan’s is at $37bn and in North Africa, there are higher GDPs but much larger populations, such as Algeria, whose GDP stands at $166bn, but the country had a population of 39m, as of 2013.
However, Tesla seems to be aware of this factor, which is why its plans for the foreseeable future are limited to the UAE.