PIF and Pirelli Join Forces for Tyre Plant in Saudi Arabia

The Saudi Arabian economy is undergoing rapid transformation and diversification, with a focus on developing its manufacturing industry. As part of this plan, the Saudi sovereign wealth fund, the Public Investment Fund (PIF), has teamed up with the Italian tyre manufacturer, Pirelli. This is to construct a state-of-the-art tyre production plant in the country. This joint venture is expected to play a significant role in creating new job opportunities and boosting the local economy. This groundbreaking partnership will also help to improve the quality of tyres produced in the region, making them more affordable and accessible to the local market.

About the agreement

The Public Investment Fund (PIF) and Pirelli Tyre S.P.A (Pirelli), a leading global tire manufacturer, have announced the signing of a joint venture (JV) agreement to build a tire manufacturing facility in Saudi Arabia. PIF will hold a 75% stake in the new JV with Pirelli holding the remaining 25% and acting as a strategic technology partner to support the development of the project by providing technical and commercial assistance.

The plant is expected to start production in 2026. The JV will manufacture high-quality tires for passenger vehicles, under the Pirelli brand, and will also manufacture and market tires under a new local brand targeting the domestic and regional market. The total investment in the JV is around $550 million. For Pirelli, the project will have a neutral impact on the company’s deleveraging targets to 2025.

Saudi Arabia is set to become a global automotive manufacturing hub by 2030. PIF has established a world-class automobile sector in Saudi Arabia. This drives transformation and boost manufacturing capabilities. Among its major investments in the sector, PIF and Hyundai Motor Company recently announced a landmark $500 million JV. This is done to establish a state-of-the-art automotive manufacturing plant in Saudi Arabia. And the launch of Tasaru, the National Automotive and Mobility Investment Company, which is dedicated to localizing automotive supply chains and manufacturing capabilities.

PIF Contribution

PIF has also made other significant investments in the future of mobility, including establishing Ceer, Saudi Arabia’s first national electric vehicle brand, as well as investing in Lucid Motors, which recently officially opened its first international manufacturing plant in Saudi Arabia.

As a leading global tire manufacturer, Pirelli will offer technical support and expertise to design, develop and operate the plant. Through this JV, PIF and Pirelli are committed to creating a national and regional champion. This localizes manufacturing capabilities for an important segment in the automotive industry, while enabling upstream and downstream activities across the value chain.

The plant is expected to generate an annual production capacity of 3.5 million units. This brings additional economic benefits and complemented by a commitment to environmental sustainability. The JV will also serve as an important anchor to attract further investment to Saudi Arabia.

Also Read: BMW approves 7 tyre brands for latest 5 Series

Yazeed A. Al-Humied, Deputy Governor and Head of MENA Investments at PIF, said: “Through this Joint Venture with Pirelli, PIF is building production capabilities in the automotive and mobility value chain and enhance opportunities for private sector contribution. This collaboration marks another pivotal milestone in our journey to diversify the economy, enhance sustainability and localize manufacturing capabilities in Saudi Arabia”.

Marco Tronchetti Provera, Executive Vice Chairman of Pirelli, said: “Accessing local production in Saudi Arabia, one of the most promising markets today, in line with our positioning in High Value and electric, represents a great opportunity for Pirelli. Capturing it alongside a partner like PIF with its plans to enable the automotive sector.”

With the combined expertise and resources of PIF and Pirelli, we can anticipate groundbreaking advancements. This increase employment opportunities, and a stronger presence in the global market. This is vision of both to drive forward and shape the future of the automotive industry in Saudi Arabia.

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