Crown Prince Mohammed bin Salman is facing growing criticism over his decision to invest $3.8 billion of Saudi Arabia’s wealth into Lucid Motors, an American electric vehicle company suffering significant financial losses. The move is the latest in a series of high-profile but controversial investments by the Crown Prince, raising concerns about the long-term viability of the country’s economic strategy under Vision 2030, which has so far failed to deliver the expected results.
Lucid Motors: A Risky Bet
The Saudi Public Investment Fund (PIF), controlled by bin Salman, already owns a substantial stake in Lucid Motors. Despite the company’s declining sales and losses, the Crown Prince plans to invest further, signaling a strong bet on the future of electric vehicles. However, market analysts have voiced concerns over this decision, as demand for electric cars has slumped, leading to Lucid’s financial troubles.
At a time when nations are investing in profitable projects to boost their economies, Saudi Arabia’s focus on struggling companies like Lucid Motors has raised eyebrows. Economic experts argue that this is yet another example of Mohammed bin Salman’s risky ventures, which may not yield the desired returns, further straining Saudi Arabia’s already fragile economy.
Failing Vision 2030 and Economic Setbacks
When Crown Prince Mohammed bin Salman introduced Vision 2030, the goal was to diversify Saudi Arabia’s oil-dependent economy by expanding into non-oil sectors. However, many of the projects under this initiative have failed to live up to expectations. The country’s economic growth has slowed significantly, with Saudi Arabia recording a 1.8% contraction in the first quarter of 2024, largely due to the decline in oil revenues.
In addition to the investment in Lucid Motors, the Crown Prince is reportedly looking to increase the PIF’s stake in other failing ventures, such as the British luxury department store Selfridges, which is currently facing bankruptcy. This pattern of high-stakes investments in failing businesses has drawn criticism, with many questioning whether the Crown Prince’s financial decisions are exacerbating the kingdom’s economic problems rather than solving them.
Extravagance Amid Austerity
While the Saudi economy is facing increasing budget deficits, with a reported shortfall of $3.3 billion in the first quarter of 2024, Mohammed bin Salman continues to make extravagant personal purchases. Among these is the acquisition of four electric airplanes from Germany, valued at $600 million. These planes are intended for the Crown Prince’s private use, primarily to attend sports and entertainment events.
The Saudi government has also signed a deal with the German company Lilium for 100 flying taxis, meant to transport guests to high-profile events across the kingdom. Critics argue that these expenditures, focused on luxury and entertainment, are out of touch with the economic reality faced by many Saudi citizens, who are struggling under rising costs of living, unemployment, and poverty.
Impact on Saudi Citizens
As the Crown Prince pours billions into entertainment and risky investments, Saudi citizens are bearing the brunt of the economic downturn. The austerity measures in place to curb spending have hit public services hard, particularly healthcare. Reports indicate that bin Salman plans to sell off significant parts of the public health sector to investors, further deepening the strain on ordinary Saudis who already face increasing hardship.
The contrast between the Crown Prince’s lavish spending on personal and entertainment ventures and the economic challenges faced by his citizens has led to widespread criticism. Economists warn that without a clear and sustainable vision, Saudi Arabia risks further economic decline, leaving its population to suffer the consequences of poor financial management.
