Tesla is currently in preliminary discussions to establish a factory in Saudi Arabia, according to the Wall Street Journal. Tesla currently operates six factories and is constructing a seventh in Mexico as part of its global expansion efforts. Elon Musk had previously stated in May that the company would likely choose a location for a new factory by the end of this year.

Sources familiar with the discussions have mentioned that the talks are in a very early stage and may not progress further, as the deal could be complex, given Saudi Arabia’s current partnership with Tesla’s electric vehicle competitor, Lucid Group. These discussions are part of Saudi Arabia’s ambitious campaign to secure the necessary metals for electric vehicles and diversify its economy away from oil. Some individuals have suggested that Saudi Arabia is trying to persuade Tesla to purchase specific quantities of metals needed for its electric vehicles from countries, including the Democratic Republic of Congo, which provides around 70% of the world’s cobalt. The newspaper reported that Saudi officials reached out to the Congolese government in June regarding securing these assets in the country, which could ultimately help supply Tesla’s factory in Saudi Arabia.

If the deal succeeds, it could help Tesla achieve its ambitions to sell 20 million cars annually by 2030, a significant increase from around 1.3 million in 2022. Toyota was the world’s top-selling automaker in 2022, with 10.5 million vehicles sold globally. It is expected that Lucid Motors, majority-owned by the Saudi Public Investment Fund, will begin limited vehicle assembly this month in its first international factory on the Red Sea coast in Saudi Arabia, where it plans to produce 150,000 vehicles annually.

Elon Musk has mentioned that Tesla is likely to need around ten factories to achieve its own goals. Tesla currently manufactures vehicles in the United States, China, and Germany, with plans to do so in Mexico as well.

Earlier this month, it was reported that Saudi Arabia is in talks with the United States to secure the necessary minerals in Africa for the transition to electric vehicles, as the U.S. seeks to reduce China’s dominance in the electric vehicle supply chain.

According to the Wall Street Journal, Saudi officials say that the latest talks with Tesla, through the Saudi Public Investment Fund, began this summer. In 2018, the Public Investment Fund purchased $2 billion worth of shares in Tesla. Later that year, Yasir Al-Rumayyan, the Governor of the Public Investment Fund, discussed further investments with Elon Musk. In the same year, the Public Investment Fund also invested $1 billion in Lucid Motors, with the condition that the automaker establishes a factory in the Kingdom. Since then, the Public Investment Fund has increased its stake in the company to around 60%, and Lucid Motors has started construction on its factory located in a special economic zone on the Red Sea coast in Saudi Arabia.

The Saudi Public Investment Fund also announced plans to establish its own electric car company called “Ceer” in partnership with Foxconn, an Apple supplier.

Saudi Arabia is currently in separate discussions with Trafigura, seeking financial support for its cobalt and copper project in the Democratic Republic of Congo, which has exceeded its budget, according to informed sources.

Tesla’s stock has risen by 123% so far this year, and the company announced on Saturday that it had produced 5 million vehicles. In a related context, the Anadolu Agency reported on the “Ex” platform on Sunday that Turkish President Recep Tayyip Erdogan invited Musk to open a Tesla factory in Turkey during a meeting at the Turkish House, a skyscraper near the United Nations headquarters in New York.