Economic viability of electric vehicle adoption in Saudi Arabia: Total cost of ownership analysis for compact SUVs under energy subsidy reform scenarios
Article Sidebar
-
total cost of ownership, electric vehicles, Saudi Arabia, energy subsidy reform, vehicle depreciation, charging infrastructure, transportation electrification
Abstract
Purpose: This study evaluates the total cost of ownership (TCO) for four distinct vehicle powertrain technologies - conventional vehicles (CV), hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV), and battery electric vehicles (BEV)- in Saudi Arabia’s compact sport utility vehicle market. The research addresses a critical gap in regional transportation economics by examining technology competitiveness under current market conditions and alternative energy pricing scenarios aligned with Vision 2030 subsidy reform objectives. Methodology: A comparative TCO analysis was conducted using empirical pricing and technical specifications from Saudi dealerships (CV, HEV) and normalized regional data (PHEV, BEV). The analytical framework integrated depreciation modeling, discounted cash flow analysis, and sensitivity testing across seven energy pricing scenarios. Data sources included Saudi market sources, international academic literature, and validated research on battery degradation from fleet analyses covering over 10,000 electric vehicles. Results: Under baseline conditions (2024 pricing: gasoline USD 0.63/L, electricity USD 0.042/kWh), hybrid electric vehicles demonstrated lowest annual TCO at USD 6,395, with battery electric vehicles ranking second at USD 6,514 annually (1.9% difference). However, sensitivity analysis identified a critical inflection point at USD 0.85/L gasoline where BEVs transition to cost parity with HEVs. At USD 1.20/L gasoline - a plausible scenario within the decade - BEVs achieve decisive economic superiority. Depreciation emerged as the primary cost driver differentiating technologies, with BEV depreciation representing 62% of total TCO versus 23% for HEVs, reflecting infrastructure and market maturity constraints. Theoretical Contribution: This research extends TCO methodology to emerging markets characterized by energy subsidies, extreme climatic conditions, and nascent EV infrastructure. The study demonstrates that technology competitiveness in such contexts depends critically on interdependent factors spanning energy pricing, infrastructure investment, market maturity, and consumer behavior. The findings challenge the assumption that TCO analysis alone predicts adoption patterns, highlighting the need for complementary policy frameworks that address infrastructure, regulation, and market development. Practical Implications: For Saudi policymakers, the analysis indicates that aggressive investment in charging infrastructure and transparent sequencing of subsidy reform could accelerate EV adoption without substantial direct consumer subsidies. Automotive manufacturers and dealers require integrated service network development and consumer education programs. For fleet operators and consumers, the analysis provides evidence-based guidance on technology selection under heterogeneous ownership profiles and pricing assumptions. The research supports Vision 2030 objectives by demonstrating that electric mobility represents both an economically viable choice and a strategic imperative for economic diversification and environmental sustainability.
Sustainable Development Goals (SDGs): SDG 7: Affordable and Clean Energy; SDG 9: Industry, Innovation, and Infrastructure; SDG 11: Sustainable Cities and Communities; SDG 12: Responsible Consumption and Production; SDG 13: Climate Action; SDG 17: Partnerships for the Goals
Full text article
References
al-Saba, T. T. (2024). Automotive market analysis: Saudi compact SUV segment. Saudi Aramco Business Development Division, unpublished report.
Argue, C. (2025, July 7). How long do electric car batteries last? What analyzing 10,000 EVs tells us. Geotab. https://www.geotab.com/blog/ev-battery-health/
Astute Analytica. (2024). Saudi Arabia automotive retail market size & trends, 2023–2032. Retrieved November 25, 2025, from https://www.astuteanalytica.com/industry-report/saudi-arabia-automotive-retail-market
Auto Value Professionals. (2025). The EV depreciation shock: Why electric vehicle values are plummeting faster than ever. https://autovalueprofessionals.com/blog/the-ev-depreciation-shock-why-electric-vehicle-values-are-plummeting-faster-than-ever/
Bauer, C., Hofer, J., Althaus, H. J., Del Duce, A., & Simons, A. (2015). The environmental performance of current and future passenger vehicles: Life cycle assessment based on a novel scenario analysis framework. Applied Energy, 157, 871-883. https://doi.org/10.1016/j.apenergy.2015.01.019
Bubulinca, C., Kazantseva, N. E., Pechancova, V., Joseph, N., Fei, H., Venher, M., ... & Saha, P. (2023). Development of all-solid-state Li-ion batteries: From key technical areas to commercial use. Batteries, 9(3), 157.
Casals, L. C., García, B. A., & Canal, C. (2019). Second life batteries lifespan: Rest of useful life and environmental analysis. Journal of Environmental Management, 232, 354-363. https://doi.org/10.1016/j.jenvman.2018.11.046
CEIC Data. (2024). Saudi Arabia motor vehicles sales. Retrieved November 26, 2025, from https://www.ceicdata.com/en/indicator/saudi-arabia/motor-vehicles-sales
Chakraborty, D., Konstantinou, T., Gutierrez Lopez, J. B., & Tal, G. (2024). Assessing the total cost of ownership of electric vehicles among California households. National Center for Sustainable Transportation Research Report. https://rosap.ntl.bts.gov/view/dot/74409
Consumer Reports. (2024). Electric vehicle vs. gas car maintenance costs. Consumer Reports.
Dubarry, M., Devie, A., & McKenzie, K. (2017). Durability and reliability of electric vehicle batteries under electric utility grid operations: Bidirectional charging impact analysis. Journal of Power Sources, 358, 39-49. https://doi.org/10.1016/j.jpowsour.2017.05.015
Ellram, L. M. (1995). Total cost of ownership: An analysis approach for purchasing. International Journal of Physical Distribution & Logistics Management, 25(8), 4-23.
Energy and Climate Intelligence Unit. (2024). The real-life costs of fuelling a PHEV. https://eciu.net/analysis/reports/2024/the-real-life-costs-of-fuelling-a-phev
Exro Technologies. (2022). Barriers to electric vehicle adoption in 2022. Industry Insights Report. https://www.exro.com/industry-insights/barriers-to-electric-vehicle-adoption-in-2022
FirstChoiceCars. (2025). Car Depreciation Explained 2025: Factors That Reduce Vehicle Value. https://www.firstchoicecars.com/blog/used-cars-depreciation-uae
Global Petrol Prices. (2024). Saudi Arabia gasoline prices. Retrieved November 25, 2025, from https://www.globalpetrolprices.com/Saudi-Arabia/gasoline_prices/
Global Petrol Prices. (2025). Saudi Arabia gasoline prices. Retrieved November 2025, from https://www.globalpetrolprices.com/Saudi-Arabia/gasoline_prices/
Gong, J., Peng, L., & Li, J. (2018, February). A Study on the Factors Affecting the Value of Used Cars in Panzhihua Region. In 2nd International Forum on Management, Education and Information Technology Application (IFMEITA 2017) (pp. 99-104). Atlantis Press.
Hang, D., McFadden, D., Train, K., & Wise, K. (2016). Is vehicle depreciation a component of marginal travel cost?: A literature review and empirical analysis. Journal of Transport Economics and Policy (JTEP), 50(2), 132-150.
Hara, T., Shiga, T., Kimura, K., & Sato, A. (2016). Techno-economic analysis of solar hybrid vehicles part 2: Comparative analysis of economic, environmental, and usability benefits (No. 2016-01-1286). SAE Technical Paper.
Hawkins, T. R., Singh, B., Majeau-Bettez, G., & Strømman, A. H. (2013). Comparative environmental life cycle assessment of conventional and electric vehicles. Journal of Industrial Ecology, 17(1), 53-64. https://doi.org/10.1111/j.1530-9290.2012.00532.x
Hennlock, M. (2019). Strong link between charging infrastructure and adoption of electric vehicles (Shift Policy Brief 2019/2020). Nordic Energy Research. http://www.nordicenergy.org/wp-content/uploads/2019/04/Charging-infrastructure-and-adoption-of-electric-vehicles_web.pdf
Higueras-Castillo, E., Singh, V., Singh, V., & Liébana-Cabanillas, F. (2024). Factors affecting adoption intention of electric vehicle: A cross-cultural study. Environment, Development and Sustainability, 26(11), 29293-29329.
International Energy Agency. (2023). Global EV outlook 2023: Catching up with climate ambitions. IEA Publications. https://www.iea.org/reports/global-ev-outlook-2023
International Energy Agency. (2024). Global EV outlook 2024. IEA. https://iea.blob.core.windows.net/assets/a9e3544b-0b12-4e15-b407-65f5c8ce1b5f/GlobalEVOutlook2024.pdf
International Monetary Fund. (2023, September 5). Saudi Arabia: 2023 Article IV consultation—press release; staff report; and statement by the executive director for Saudi Arabia (IMF Country Report No. 23/323). Retrieved from https://www.elibrary.imf.org/downloadpdf/view/journals/002/2023/323/article-A001-en.pdf
iSeeCars. (2025, February). The top 25 cars that hold their value best – and the 25 worst: Electric vehicle values continue to crash after purchase, while hybrids and trucks hold up well. https://www.iseecars.com/cars-that-hold-their-value-study
Jameel Motors. (2024, October 21). Are EVs winning the race in the Middle East? https://jameelmotors.com/en/insights/are-evs-winning-the-race-in-the-middle-east/
Kaizen Institute. (2025). TCO: How to calculate total cost of ownership and make smarter decisions. https://kaizen.com/insights/tco-calculate-total-cost-ownership/
Kelley Blue Book. (2025). Car depreciation calculator. Retrieved November 25, 2025, from https://www.kbb.com/car-depreciation/
Ken Research. (2025). Chinese automakers reshape Gulf auto market in KSA & UAE. https://www.kenresearch.com/articles/chinese-automakers-ksa-uae-gulf-auto-market
Kher, A. (2025). Barriers to Widespread Electric Vehicle Adoption: Consumer Perception and Policy Implications. Shodh Sagar Journal of Electric Vehicles, 2(2), 7-12.
Krishna, G., Singh, G., & Pandey, S. (2021). Understanding and identifying barriers to electric vehicle adoption through thematic analysis. Transportation Research Interdisciplinary Perspectives, 10, Article 100384. https://doi.org/10.1016/j.trip.2021.100384
Langford, R. P., & Gillingham, K. (2023). Quantifying the benefits of the introduction of the hybrid electric vehicle. International Journal of Industrial Organization, 87, Article 102904. https://doi.org/10.1016/j.ijindorg.2022.102904
Mahrous, A. (2025, April 30). Insights on the Saudi Arabian vehicle market and autocare services industry. LinkedIn. https://www.linkedin.com/pulse/insights-saudi-arabian-vehicle-market-autocare-ahmed-jgbvf
Mamala, J., Graba, M., Bieniek, A., Prażnowski, K., Augustynowicz, A., & Śmieja, M. (2021). Study of energy consumption of a hybrid vehicle in real-world conditions. Eksploatacja i Niezawodność, 23(4), 636-645.
Neubauer, J., & Wood, E. (2014). The impact of range anxiety and home, workplace, and public charging infrastructure on simulated battery electric vehicle lifetime utility. Journal of Power Sources, 257, 12-20. https://doi.org/10.1016/j.jpowsour.2014.01.075
Nurhadi, L., Borén, S., & Ny, H. (2014). A sensitivity analysis of total cost of ownership for electric public bus transport systems in Swedish medium sized cities. Transportation Research Procedia, 3, 818-827. https://doi.org/10.1016/j.trpro.2014.10.058
Ouyang, D., Chen, M., Huang, Q., Weng, J., Wang, Z., & Wang, J. (2019). A review on the thermal hazards of the lithium-ion battery and the corresponding countermeasures. Applied Sciences, 9(12), 2483.
Palmer, K., Tate, J. E., Wadud, Z., & Nellthorp, J. (2018). Total cost of ownership and market share for hybrid and electric vehicles in the UK, US and Japan. Applied Energy, 209, 108-119. https://doi.org/10.1016/j.apenergy.2017.10.089
Pathak, A. (2021). An Analysis of Total Cost of Ownership and Cost Competitiveness of Privately-Owned Electric Vehicles in Nepal (Doctoral dissertation, Pulchowk Campus).
Peters, J. F. (2023). Best practices for life cycle assessment of batteries. Nature Sustainability, 6(6), 614-616. https://doi.org/10.1038/s41893-023-01067-y
Plötz, P., Moll, S., Stöver, M., & Mock, P. (2022, June). Real-world usage of plug-in hybrid vehicles in Europe: A 2022 update on fuel consumption, electric driving, and CO2 emissions (White Paper). International Council on Clean Transportation. https://theicct.org/publication/real-world-phev-use-jun22/
PwC Middle East. (2024). eMobility outlook 2024. KSA. https://www.pwc.com/m1/en/publications/documents/2024/emobility-outlook-2024-ksa-edition.pdf
Sarrakh, R., Renukappa, S., Suresh, S., & Mushatat, S. (2020). Impact of subsidy reform on the kingdom of Saudi Arabia’s economy and carbon emissions. Energy Strategy Reviews, 28, 100465. https://doi.org/10.1016/j.esr.2020.100465
Saudi Electricity Company. (2024). Electricity tariff structure 2024. Retrieved from https://www.se.com.sa
Saudi Green Initiative. (2025). Saudi Green Initiative. Retrieved November 25, 2025, from https://www.vision2030.gov.sa/en/explore/projects/saudi-green-initiative
Statista. (2025). SUVs - Saudi Arabia. Retrieved November 25, 2025, from https://www.statista.com/outlook/mmo/passenger-cars/suvs/saudi-arabia
TechSciResearch. (2024). Middle East & Africa SUV market size, report 2030F. Retrieved November 25, 2025, from https://www.techsciresearch.com/report/middle-east-africa-suv-market/3358.html
TechSciResearch. (2024). Saudi Arabia electric vehicle charging infrastructure market report 2030. https://www.techsciresearch.com/report/saudi-arabia-electric-vehicle-charging-infrastructure-market/9442.html
Toukabri, M., & Boutaleb, B. (2025). Assessing factors impacting electric vehicle adoption in Saudi Arabia: Insights on willingness to pay, environmental awareness, and perceived risk. Engineering, Technology & Applied Science Research, 15(1), 19729-19736. https://doi.org/10.48084/etasr.9311
Transport & Environment. (2024). Smoke screen: The growing PHEV emissions scandal. https://www.transportenvironment.org/articles/smoke-screen-the-growing-phev-emissions-scandal
U.S. Department of Energy. (2024). Electric vehicle benefits and considerations. Alternative Fuels Data Center. https://afdc.energy.gov/fuels/electricity-benefits
Verified Market Research. (2025). Middle East SUV market size, scope, share and forecast. https://www.verifiedmarketresearch.com/product/middle-east-sport-utility-vehicle-suv-market/
Vetter, J., Novák, P., Wagner, M. R., Veit, C., Möller, K. C., Besenhard, J. O., ... & Hammouche, A. (2005). Ageing mechanisms in lithium-ion batteries. Journal of power sources, 147(1-2), 269-281. https://doi.org/10.1016/j.jpowsour.2005.01.006
Waldmann, T., Wilka, M., Kasper, M., Fleischhammer, M., & Wohlfahrt-Mehrens, M. (2014). Temperature dependent ageing mechanisms in lithium-ion batteries - A post-mortem study. Journal of Power Sources, 262, 129-135. https://doi.org/10.1016/j.jpowsour.2014.03.112
Woody, M., Adderly, S. A., Bohra, R., & Keoleian, G. A. (2024). Electric and gasoline vehicle total cost of ownership across US cities. Journal of Industrial Ecology, 28(2), 194-215. https://doi.org/10.1111/jiec.13463
Wouters, M., Anderson, J. C., & Wynstra, F. (2005). The adoption of total cost of ownership for sourcing decisions: A structural equations analysis. Accounting, Organizations and Society, 30(2), 167-191.
WSP USA. (2023). Electric vehicle total cost of ownership analysis. Prepared for Environmental Defense Fund. https://www.edf.org/sites/default/files/2023-07/WSP%20Total%20Cost%20of%20Ownership%20Analysis%20July%202023.pdf
Xu, F., Crawford, C., Feng, Y., Lin, Z., & Li, S. (2023). Environment-economic analysis of diesel, hybrid electric, plug-in hybrid electric trucks in China. Transportation Research Part D: Transport and Environment, 117, 103661.
Zecar. (2025). Why EVs are cheaper to maintain than ICE cars in 2025? https://zecar.com/reviews/why-evs-are-cheaper-to-maintain-than-ice-in-2025
Zhang, X., Bai, X., & Zhong, H. (2018). Electric vehicle adoption in license plate-controlled big cities: Evidence from Beijing. Journal of Cleaner Production, 202, 191-196. https://doi.org/10.1016/j.jclepro.2018.07.265
Zheng, Y., Liu, D., An, F., Wang, J., Gao, X., & Jia, N. (2025). Impact of charging infrastructure construction on electric vehicle diffusion based on a multi-agent model. iScience, 28(4), 112257.
Authors
Copyright (c) 2025 Tawfiq T. Al-Saba
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication, with the work simultaneously licensed under a CC BY 4.0 License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
Article Details
