Can Saudi Arabia keep pace with its ambitious mega-project spending spree?
Digital render of NEOM’s The Line project in Saudi Arabia
The Line, NEOM
In Saudi Arabia’s northwestern desert, a sprawling construction site replete with cranes and pile drivers sits encircled by a recently-built road. A pair of tracks cuts through the site like deep gashes through the sand, comprising the spine of what planners say will be a high-speed rail system.
The skeletal infrastructure forms the foundations of The Line, a multi-billion dollar high-tech city that its architects say will eventually house 9 million people between two 106-mile long glass skyscrapers more than 1,600 feet high.
The project, whose estimated cost is in the hundreds of billions, is just one of the hyper-futuristic venues planned in Neom, the brainchild of Saudi Crown Prince Mohammed bin Salman and a region that the kingdom hopes will bring millions of new residents to Saudi Arabia and revolutionize living and technology in the country. It’s a core pillar of Vision 2030, which aims to diversify the Saudi economy away from oil revenues and create new jobs and industries for its burgeoning young population.
The cost of Neom has been estimated to be as high as $1.5 trillion. In the years since it was announced, Saudi Arabia’s Public Investment Fund, the mammoth sovereign wealth fund now overseeing $925 billion in assets, has poured billions into overseas investments, with ever-increasing waves of foreign investors flying to the kingdom to raise cash.
This year, however, has seen a sharp change in direction in terms of spending, with a stated emphasis on keeping investments at home along with reports of cutting costs on megaprojects like those in Neom. The changes come as the Saudi deficit grows and the outlook for oil demand, along with global oil prices, sees sustained lows.
Construction for The Line project in Saudi Arabia’s NEOM, October 2024
Giles Pendleton, The Line at NEOM
That begs the question: does Saudi Arabia have enough money to meet its lofty goals? Or will it have to be more flexible to make its spending trajectory sustainable?
One Gulf-based financier with years of experience in the kingdom told CNBC: “The PIF’s pivot towards domestic investments, widely acknowledged but now officially admitted, suggests that there is still a lot of spending needed. Saudi Arabia has poured tens of billions into projects that have yet to hint of any financial returns.”
The financier spoke anonymously as they were not authorized to speak to the press.
Andrew Leber, a researcher at Tulane University who focuses on the political economy of the Middle East, believes that the current pace of spending won’t last.
“The number of ‘we pay up front and hope for economic returns later’ giga projects that are currently underway is not sustainable,” Leber said.
“With that being said,” he added, “the Saudi monarchy has shown itself to be somewhat flexible whenever economic realities assert themselves. I do think that eventually, a number of projects will be quietly shelved in order to bring its fiscal outlays back into greater sustainability.”
Digital render of NEOM’s The Line project in Saudi Arabia
The Line, NEOM
Saudi Arabia in October cut its growth forecasts and raised its budget deficit estimates for the fiscal years 2024 to 2026 as it expects a period of higher spending and lower projected oil revenues. Real gross domestic product is now expected to grow 0.8% this year, a dramatic drop from a previous estimate of 4.4%, according to the ministry of finance.
The kingdom’s economy also swung dramatically from a budget surplus of $27.68 billion in 2022 to a deficit of $21.6 billion in 2023 as it ramped up public spending and decreased oil production due to its OPEC+ supply cut agreement. Its government forecasts a deficit of $21.1 billion for 2024, projecting revenue at $312.5 billion and expenditures at $333.5 billion.
Saudi authorities expect that the budget will remain in deficit for the next several years as it pursues its Vision 2030 plans, but they add that they are fully prepared for this.
“Our non-oil revenues have grown significantly, now it covers about 37% of expenditure. That’s a significant diversification, and that gives you a lot of comfort that you can maneuver and be stable despite the fluctuation in oil price,” Saudi Finance Minister Mohammed Al-Jadaan told CNBC in October. “Our aim is to make sure that our plans are stable and predictable.”
“We are not going to blink, we have significant fiscal resource under our disposal, and we are very disciplined in our fiscal position,” the minister said.
Saudi Arabia has an A/A-1 credit rating with a positive outlook from S&P Global Ratings and an A+ rating with a stable outlook from Fitch. That combined with high foreign currency reserves — $456.97 billion as of September, a 4% percent increase year-on-year, according to the country’s central bank — puts the kingdom in a comfortable place to manage a deficit, economists told CNBC.
Riyadh is successfully issuing bonds, tapping debt markets for more than $35 billion so far this year. The kingdom has also rolled out a series of reforms to boost and de-risk foreign investment and diversify revenue streams, which S&P Global said in September “will continue to improve Saudi Arabia’s economic resilience and wealth.”
When asked if the kingdom’s spending trajectory is sustainable, Al-Jadaan replied: “Absolutely, yes,” adding that the government recently published its numbers for the next three years and that “we think it is very sustainable.”
Still, many analysts outside the kingdom, as well as individuals working within the kingdom and on NEOM projects, are skeptical of the megaprojects’ feasibility. Reports that some projects have been dramatically cut down — in the case of the Line, its size target slashed from 106 miles to 1.5 miles and population target down from 1.5 million by 2030 to less than 300,000 — attest to that concern on a higher level.
Neom executives acknowledge that the current phase of work on The Line is for a building length of 1.5 miles — which would still make it the longest building in the world. However, the eventual goal of 106 miles has not changed, they say, stressing that cities are not built overnight and that construction is continuing apace.
For Tarik Solomon, chairman emeritus at the American Chamber of Commerce in Saudi Arabia, “it’s promising to see transparency and some project cutbacks.”
“The Kingdom’s rising external borrowing reflects challenges with Vision 2030 feasibility,” he told CNBC.
“Though debt remains manageable at 26.5% of GDP, continued small pressures add up, underscoring the need for fiscal discipline and achievable goals.”
Solomon pointed to the desire of many Saudi residents for improvements to the infrastructure they use in their daily lives — like Riyadh’s public transport, network connectivity, schools, and health care.
“The road to resilience for Saudi Arabia isn’t in figuring out ski slopes in the desert but in building with innovation, complexity, and the courage to pursue what’s truly impactful,” he said.
The electric restomod experts at Lunaz have turned their talents towards the classic Rolls-Royce Phantom V limousine – and the result is exactly the kind of smooth, quiet, and luxurious ride RR’s founders would have built.
Rolls-Royce’ founders dedicated their engineering talents to developing cars that were smooth, quiet, and adequately powerful – and they spared no expense. The company Charles Rolls and Henry Royce founded would eventually go on to develop some of the most powerful and celebrated combustion engines of the twentieth century … but the car they wanted to build? It was electric.
“The electric car is perfectly noiseless and clean,” Charles Rolls told The Motor-Car Journal, all the way back in April of 1900. (!) “There is no smell or vibration, and they should become very useful when fixed charging stations can be arranged. But for now, I do not anticipate that they will be very serviceable – at least for many years to come.”
Well, 125 years seems like “many” to – and the talented craftspeople and engineers at Lunaz seem to agree. Meet the Lunaz Rolls-Royce Phantom V limousine.
It’s glorious
Lunaz says it’s true to Rolls’ vision “down to the smallest, most indulgent detail.” To that end, the company re-trims the modern heated and ventilated seats in fine leathers, hand-cut and stitched to the buyers’ specifications. In the rear, the center console can be ordered with a built-in cigar humidor, a cocktail bar, or some other custom-spec, lockable storage lined in suede and polished walnut (translation: guns and drugs, probably).
When reimagining the Rolls-Royce Phantom V, (we) started by understanding the essence of its original design. Every component and dynamic was scrutinized to identify where thoughtful innovation could truly elevate the experience. The result is a harmonious blend of modern advancements and original mastery, unlocking new levels of performance, reliability and refinement while honoring Rolls-Royce’ classic soul.
Like the classic Bentley S2 Continental the company revealed in 2023, the big electric Roller is equipped with an 80 kWh battery pack sending electrons to a proprietary Lunaz drivetrain featuring 400 hp worth of electric motors delivering a silky-smooth 530 lb-ft of torque, good for a 0-100 km/h (62 mph) swoosh in about seven seconds. Of course, why you’d ever ask your driver to perform such plebian stunts is simply beyond me.
The transformation and restoration took more than 5,500 man-hours to complete, and involve more than 11,000 new or reconditioned components at a cost of more than £1 million (about $1.35 million US). If you place your order today, you should get yours in 18-24 months.
Lunaz Rolls-Royce gallery
SOURCE | IMAGES: Lunaz.
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Fortescue has taken the wraps off a prototype of its proposed “Infinity Train” electric locomotive, making the 1,100 km (about 685 miles) trip from Perth to the Pilbara and marking a major milestone in the decarbonization of the company’s heavy haul operations.
Co-developed with the locomotive experts at Downer Group, Fortescue revealed its concept for a battery electric “Infinity Train” back in March of 2022. At the time, the company promised a “world’s first” iron ore train capable of fully charging its batteries through regenerative braking. The two companies claimed the clever technology would create a self-sustaining, zero-emission rail system powered entirely by the force of gravity during the train’s loaded downhill travels.
This week, the concept went from the drawing board to the real world, completing an 1,100 km trip across Australia and proving itself to be up to the task of handling the grueling demands of Fortescue’s massive mining operations.
“We’re thrilled to see our battery electric locomotive prototype arrive in the Pilbara,” said Ellie Coates, CEO of Fortescue Zero. She added that the achievement, using zero fossil fuels, “represent(s) a major step in Fortescue’s journey to Real Zero.”
The Fortescue Infinity Train uses the energy produced by slowing the loaded train on downhill sections of the company’s 385 mile private, heavy-haul rail network to recharge its battery systems. That energy is enough to bring the unloaded train back to the mine, eliminating the need for external charging infrastructure or additional renewable energy sources, making the train almost entirely self-sufficient.
Fortescue says the deployment of the Infinity Train concept at its mines will eliminate more than 82 million liters of diesel fuel consumption (about 21 million gallons, which ChatGPT tells me amounts to about 235,200 tons of CO₂ emissions).
That change alone would eliminate about 11% of Scope 1 emissions annually for Fortescue all on its own, putting it well on its way to its stated goal of achieving “Real Zero” emissions-free operations.
Electrek’s Take
Using gravity to charge up heavily-laden mining vehicles on downhill runs is an idea that’s been put into practice for years, with great success wherever the topography allows (since 2017, at least). Combining that clever use of gravity, traction braking, and battery storage for use on a rail system like this just seems smart, and it makes me think we’re just scratching the surface of all the clever ways electrification and battery storage will eventually get put to use.
I wonder what would happen if you threw some battery electric rail cars into the mix, as well!? You guys are smart, head down to the comments and let me know (and, while you’re there, help me check ChatGPT’s math on those carbon emissions).
SOURCE | IMAGES: Fortescue, via LinkedIn.
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A new study by the Pembina Institute shows that a third of the commercial trucks and vans on Toronto’s roads are ready to electrify today – while nearly half could be electrified by 2030.
A new analysis by the Pembina Institute titled Electrifying Fleet Trucks: A case study estimating potential in the GTHA finds that as many as a third of trucks in the Greater Toronto and Hamilton Area (GTHA) could go electric today, rising to more than half by early 2030s — insulating businesses from rising fuel costs and reducing harmful air pollution that drives up health care costs. What’s more, the report found that battery range and charging access are less of a barrier than expected.
“Real-world travel data from Canadian trucks, collected over summer and winter months, shows that electrification is possible today,” says Chandan Bhardwaj, Senior Analyst at the Pembina Institute. “In fact, with a staggered approach, the GTHA — home to over half the province’s vehicle stock — could reach 50% sales for lighter trucks by 2030, helping offset lower adoption rates for heavier trucks.”
So, what’s holding back electric vehicle adoption? According to the study’s authors, it’s a matter of public policy. But without the right policies in place, the study argues, businesses face unnecessary hurdles in making the switch.
“Our analysis shows that Ontario has a clear path to accelerating the transition to zero-emission trucks — unlocking economic opportunities, improving public health and positioning itself as a leader in clean transportation,” says Adam Thorn, Transportation Director at the Pembina Institute. “With the right policies in place, businesses can reap the benefits of lower costs while the province strengthens its manufacturing sector and energy security.”
We already knew this
If all of this sounds a bit familiar, it’s probably because you’ve heard this before. The California Air Resource Board (CARB) came to very similar conclusions in their report, titled, Determining energy use patterns and battery charging infrastructure for zero-emission heavy-duty vehicles and off-road equipment.
CARB staff believe that several heavy-duty ZE vocational trucks are ready to be electrified because of their low daily mileage demands (<100 mi). Long-haul Class 8 trucks continue to be a challenge to fully electrify because of the long operation range (300+ mi) and on-demand charging need.
In fact, the California study came to almost the exact conclusion that the Toronto study did when examining the heavy-duty Class 7 and 8 EV market. Which is to say: it’s not a question of capability, but a question of availability.
“The availability of on-road heavy-duty ZE trucks has increased in recent years,” reads the report. “But their numbers remain significantly lower than their diesel and natural gas counterparts. As of 2022, an estimated 2,300 on-road ZE medium- and heavy-duty vehicles are operating in California, with the vast majority located in South Coast Air Bassin (Figure 1). On-road heavy-duty ZE transit buses account for the majority of all on-road heavy-duty ZEVs in California, but, as of 2023, sales of ZE heavy-duty trucks and medium-duty step vans have outpaced other vocations, indicating that these vehicles will be more prevalent in fleets in the near future.”
That’s proven to be true, with sales of Class 2 vans and other medium-duty EVs rapidly outpacing the general public’s adoption of EVs as new options became available in 2024, with no signs of slowing down in 2025 (at least, where the right policies are in place).
Here are some of the key takeaways from the Pembina Institute study from the Toronto truck market. Obviously, it won’t directly translate to every city’s truck fleet – but take a look at Toronto’s demographics and some of the key variables involved (truck size, average loads, miles driven, etc.) and you might be surprised at how similar your city and your fleet might be.
- Businesses can save up to 40% of fuel and maintenance costs by switching to electric trucks.
- Electric trucks eliminate tailpipe emissions, cutting harmful air pollution and improve public health.
- Traffic related air pollution in the Greater Toronto and Hamilton Area leads to 700 premature deaths and 2,800 hospitalizations every year, costing health care system $4.6 billion annually.
- Ontario’s Driving Prosperity plan highlights the need for increased electrification, while the City of Toronto is targeting 30% of all registered vehicles to be electric by 2030.
- Governments worldwide are embracing electrification, setting ambitious sales targets for zero-emission vans and trucks.
- By 2030, jurisdictions like Europe, China, California, British Columbia and Quebec aim for about 35% of new truck sales to be zero-emission, ramping up to nearly 100% by 2040.
SOURCES: CARB, Pembina Institute, via Electric Autonomy; featured image by PACCAR.
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