RIYADH — The Public Investment Fund (PIF) and Pirelli Tyre S.P.A (Pirelli) have officially inked a joint venture (JV) agreement to construct a cutting-edge tire manufacturing facility in Saudi Arabia.

The agreement, announced on Thursday, outlines PIF's 75% majority stake, with Pirelli holding the remaining 25%, playing a pivotal role as a strategic technology partner to facilitate the project's advancement through technical and commercial support.

The anticipated commencement of production is set for 2026. This joint venture aims to produce top-tier tires bearing the Pirelli brand for passenger vehicles. Additionally, the facility will introduce a new local brand targeting both domestic and regional markets. The ambitious venture comes with a substantial investment of approximately $550 million, making it a significant player in Saudi Arabia's burgeoning automotive industry.

Saudi Arabia, with aspirations to become a global automotive manufacturing hub by 2030, is witnessing transformative initiatives led by PIF.

The current venture follows PIF's recent collaboration with Hyundai Motor Company, resulting in a groundbreaking $500 million joint venture to establish a state-of-the-art automotive manufacturing plant. The launch of Tasaru, the National Automotive and Mobility Investment Company, further underscores Saudi Arabia's commitment to localizing automotive supply chains and manufacturing capabilities.

In line with its commitment to the future of mobility, PIF has not only spearheaded the establishment of Ceer, Saudi Arabia's inaugural national electric vehicle brand but has also invested in Lucid Motors, whose international manufacturing plant is now operational in Saudi Arabia.

As a global tire manufacturing leader, Pirelli is set to provide crucial technical support and expertise for the design, development, and operation of the new plant. The joint venture's core objective is to create a national and regional champion that localizes manufacturing capabilities, fostering growth across the automotive industry's value chain.

With an anticipated annual production capacity of 3.5 million units, the plant is poised to deliver significant economic benefits while prioritizing environmental sustainability. This JV is expected to serve as a key attractor for further investments in Saudi Arabia's thriving automotive sector.

As part of Pirelli's local-for-local strategy, this joint venture positions the company as the first tier 1 tire maker to directly source production in Saudi Arabia.

Yazeed A. Al-Humied, Deputy Governor and Head of MENA Investments at PIF, expressed, "Through this Joint Venture with Pirelli, PIF is building production capabilities in the automotive and mobility value chain, enhancing 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, stated, "Accessing local production in Saudi Arabia, one of the most promising markets today, in line with our positioning in high halue and electric, represents a great opportunity for Pirelli capturing it alongside a partner like PIF with its plans to enable the automotive sector."