The End of the Road for Gas Guzzlers: This Oil-Rich Nation is Going All-In on Electric Vehicles

“Oil King” Makes a Shift to Electric Vehicles

Once a land of supercars with a penchant for guzzling gasoline, the United Arab Emirates (UAE) is rapidly emerging as a surprising leader in electric vehicles in the Middle East, signaling that the global energy transition has reached the heart of oil production.

Ambitious climate goals, charging infrastructure, and a growing range of vehicles at various price points are driving this revolution in the country.

According to the latest data from the UAE’s Ministry of Energy and Infrastructure, electric vehicles accounted for 13% of total car sales in 2023, a significant increase from 3.2% in 2022 and just 0.7% in 2021.

This context underscores the transformation of a nation whose prosperity has been rooted in oil, with green vehicles forming a crucial part of its economic diversification and sustainability strategies.

UAE aims to have electric vehicles make up half of all cars on its roads by 2050.

As of last year, UAE had over 147,000 electric and hybrid vehicles on its roads, with electric car registrations alone increasing by more than 25% year-on-year. Total new car sales in UAE stood at 316,000 in 2024.

Industry insiders suggest that UAE could surpass its 2050 electric vehicle target ahead of schedule, given the pace of innovation and consumer interest.

“If Norway, also a major oil-producing nation, can achieve over 96% new electric vehicle sales, there’s no reason why UAE can’t,” said Alessandro Tricamo, a specialist at consulting firm Oliver Wyman in Dubai.

Demand for electric vehicles in the country is already high. According to a joint survey by UAE’s largest car dealer, Al-Futtaim, and market research firm YouGov, nearly two-thirds of UAE residents want electric vehicles to be their primary mode of transportation by 2025.

The Boom’s Origins

The surge in electric vehicle popularity in UAE stems from ambitious climate initiatives. In January 2017, the country launched the UAE Energy Strategy 2050, followed by the Net Zero by 2050 Strategic Initiative in October 2021, both aimed at reducing emissions and increasing the share of clean energy in the country’s energy mix to 30% by 2031.

“It’s a combination of cost, climate awareness, and policy,” said Paul Willis, chairman of Al-Futtaim. “But performance is also becoming a bigger consideration. Modern new energy vehicles offer a smooth, quiet ride with instant torque and advanced features that are attracting tech-savvy consumers.”

Specialist Tricamo noted a significant shift in perceptions about electric vehicles. Customers are increasingly drawn to their modern designs, advanced features, and superior driving comfort, along with lower ownership and maintenance costs, coupled with growing environmental awareness.

Willis mentioned that Al-Futtaim’s electric vehicle offerings span various segments, from Toyota and Lexus to BYD and China’s GAC Aion, making electric vehicles accessible to a wider demographic.

He added that new launches like the BYD Sealion 7 and hybrid models such as the Lexus LX 700h are helping Al-Futtaim maintain sustainable double-digit growth in line with UAE’s goals.

“The story isn’t about replacing gasoline but about creating a balance and resilience in an economy that’s future-ready,” said Moutaz Louis, CEO of Smart Mobility International, a UAE-based electric vehicle distributor. “Electric vehicles will increasingly take center stage.”

Louis pointed out that even with fuel prices in UAE remaining a fifth lower than the US average, electric vehicles are gaining traction due to their lower long-term operating costs and improved range, facilitated by the expanding charging infrastructure.

Gas-powered Cars Becoming Obsolete

In May 2024, the Ministry of Energy and Infrastructure launched UAEV, a joint venture with Etihad Water and Electricity, to build a nationwide charging network. According to the joint venture, the country is expected to have 1,000 public charging stations for various vehicle types by the end of 2030, many of which will be fast chargers.

Etihad Water and Electricity already boasts an extensive network with approximately 740 charging points across Dubai.

Over the past three years, UAE has offered incentives to electric vehicle owners, including free charging, privileged parking, and smart toll cards.

These incentives have resonated well with UAE consumers. Electric vehicle owners spend just a quarter of the fuel costs of traditional car owners. Maintenance costs for electric vehicles are also significantly lower due to fewer moving parts and longer service intervals.

Challenges remain in UAE’s electrification journey. The desert’s harsh climate can impact battery performance, and the charging infrastructure needs to continue expanding to meet the growing demand. Specialist Tricamo noted that battery recycling and second-life applications will become increasingly important as the electric vehicle fleet grows.

Complementary measures include mandating a minimum number of charging points at gas stations and shopping malls, encouraging more companies to enter the charging market.

“The shift to electric is happening faster than anyone predicted. By the end of 2025, internal combustion engine vehicles could be as obsolete as horse-riding,” said Trimaco.