Middle East insights: Why is UAE a target market for Chinese EVs?

Chinese electric car (EV) makers have concluded 2023 with significant sales. According to the work report delivered to China's top legislature, China accounted for over 60 percent of global electric vehicle output and sales in 2023. In addition to meeting the domestic demands, China's carmakers are dominating the global market.

Driving on the highway in the United Arab Emirates (UAE), it's becoming increasingly common to spot EVs with a Chinese brand, such as BYD and Hongqi. As of 2024, more than ten Chinese automobile companies have introduced electric cars to the UAE market, making it a key hub for Chinese new electric vehicles (NEVs) in the Middle East. Here comes a question: Why do Chinese car companies choose the UAE?

Green vision fuels market

"We will celebrate the last barrel of oil." This is a famous quote by Sheikh Mohamed bin Zayed Al Nahyan, president of the UAE, capturing the challenges facing the country and also its vision to accelerate the energy transition as a major oil-producing nation.

Under the backdrop of embracing a post-oil future, the UAE is one of the first Gulf countries to promote green mobility and takes a regional lead in EV development. In a report of "Global Electric Mobility Readiness Index 2023," the UAE ranked seventh globally and secured the highest position in the Middle East.

The UAE has implemented a range of of policies to promote new energy vehicles. In 2023, the UAE Ministry of Energy and Infrastructure launched an ambitious "Global Electric Vehicle Market" project, to increase the share of electric cars on the roads to 50 percent by 2050.

Following the national vision to reduce carbon dioxide emissions through the use of clean energy or electrification, UAE's capital and largest emirate Abu Dhabi released in 2022 its regulatory policy for EV charging infrastructure. 

This policy establishes the core principles governing the ownership, installation, and administration of Electric Vehicle Supply Equipment (EVSE), as well as the provision of electricity to EVSE and the pricing structure for end customers, aiming to facilitate the 2050 goal.

Meanwhile, another emirate, Dubai, has introduced the "2030 Green Transport Strategy" to reach 42,000 NEVs on the roads by 2030. 

Additionally, the government aims to have electric or hybrid vehicles make up 30 percent of its official fleet by the same year. To incentivize more consumers to purchase and drive EVs, Dubai has mandated that 5 percent of parking spaces in parking lots be reserved for green, low-emission vehicles.

Promising China-UAE cooperation

With an immense market potential ahead, Chinese automobile enterprises are increasingly targeting the UAE market. The country ranks ninth among China's top 10 vehicle export markets in 2023, with a total volume reaching 159,000, according to data released by China Association of Automobile Manufacturers (CAAM) on February 29.

This year marks the 40th anniversary of diplomatic relations between China and the UAE. The longstanding and deepening cooperation between the two nations has instilled confidence in many Chinese automobile enterprises venturing overseas.

In an interview with CGTN, vice president of One Road Group Wu Shengcong said that the sales growth of EVs at the local market can be attributed not only to the inherent advantages of Chinese products, but also to the solid groundwork laid by Chinese automotive brands in overseas markets through years of efforts.

"Meanwhile, considering UAE's active role in the Belt and Road Initiative and the longstanding friendly relations between China and the UAE, the company established its headquarters in the UAE," said Wu. 

One Road Group, a dealer based in the UAE, has been introducing several Chinese car brands into the local market for years.

At the dawn of 2024, the UAE officially joined BRICS, which presented more opportunities for Chinese companies to go global. 

"We believe that this would attract more investment and bring more people into the market, which will undoubtedly stimulate market activity and prosperity," said Wu, "For businesses, leveraging the momentum of national strategic development provides us with clearer direction, greater confidence in our development, and increased chances of success."

Supervisor: Mu Li

Producer: Li Chao