The Public Investment Fund (PIF) and Pirelli Tyre S.P.A (Pirelli), a leading global tire manufacturer, announced on Thursday 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, according to a PIF press release.
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.
The statement said that "Saudi Arabia is set to become a global automotive manufacturing hub by 2030. PIF has established a world-class automobile sector in Saudi Arabia by driving transformation and boosting manufacturing capabilities, infrastructure and supply chains in Saudi Arabia and beyond."
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 that 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, bringing 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.
In line with its local-for-local strategy, Pirelli, through the JV, will become the first tier 1 tire maker to directly source production in Saudi Arabia.
Deputy Governor and Head of MENA Investments at PIF Yazeed A. Al-Humied, said through the Joint Venture, PIF is building production capabilities in the automotive and mobility value chain.
“This collaboration marks another pivotal milestone in our journey to diversify the economy, enhance sustainability and localize manufacturing capabilities in Saudi Arabia,” he said.
Executive Vice Chairman of Pirelli Marco Tronchetti Provera said that accessing local production in Saudi Arabia “represents a great opportunity for Pirelli.”
The closing of the transaction is subject to obtaining approvals from the relevant authorities and satisfying certain conditions under the agreement, the PIF statement said.
