(Bloomberg) — Hyundai Motor Co. has agreed to a deal with Saudi Arabia’s sovereign wealth fund to develop a more than $500 million car assembly plant, joining electric vehicle maker Lucid Motors Inc. in producing cars in the oil-rich kingdom.

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The Korean car company will likely develop the facility at King Abdullah Economic City near Jeddah with an aim to produce 50,000 vehicles a year, according to Park Jiwoo, a senior manager at Hyundai’s external affairs team. The plant will be a joint venture between the Public Investment Fund, which will hold a 70% stake in the Saudi venture, and Hyundai, which will own the rest, she said.

The assembly plant will start operations in early 2026, producing a mix of electric vehicles and internal combustion engine cars, and is expected to cover around 300,000 square meters (3.2 million square feet.)

PIF, as the kingdom’s wealth fund is known, confirmed the joint venture in a statement and said the new plant “will create thousands of jobs and allow for knowledge and expertise transfer.”

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Developing a domestic auto industry centered around Jeddah is one part of Saudi Crown Prince Mohammed bin Salman’s plans to diversify the country’s oil-dependent economy. The initiative is being spearheaded by the PIF, which invested in US-based electric vehicle startup Lucid and got them to build their first international facility in Saudi Arabia.

It’s also created its own EV brand called Ceer, and is investing internationally and domestically to secure the metals and minerals required to develop a supply chain for the industry.

Read More: Saudi Arabia’s Next Big Play: Mining for Metals in the Desert

(Updates with PIF’s confirmation in fourth paragraph.)

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