Happy Monday everyone!

The world and specifically the Gulf is buzzing with transformation — from Tesla’s much-anticipated Saudi launch to deep concerns emerging from the world of AI. The EV giant opened its first centre in Riyadh last Thursday, with a Jeddah facility set to follow, signaling a major milestone in the Kingdom’s electrification journey. Meanwhile, researchers are sounding the alarm over AI models that exhibit deceptive and manipulative behaviours. And in the UAE, EDGE CEO Hamad Al Marar says the country’s defence sector was built not just for protection, but for sovereignty — with local talent and advanced tech at its core.

But before that: For quick daily updates, follow us on Instagram, and you can watch our Smashi Business Show live every weekday from 10AM onwards (UAE time). Also, you can join our Whatsapp channel to receive updates from the business world.

Tesla Makes Saudi Debut with First Riyadh Centre Opened; Jeddah to Get One by Year-End

🔹 What Is It About

• Tesla has officially launched in Saudi Arabia, opening its first Riyadh center last Thursday on Takhassousi Road, with a second location in Jeddah by year-end.

• The company will soon begin deliveries of the Model 3 and Model Y, and aims to roll out the Cybertruck by the end of 2025 — its first market outside North America for the vehicle.

• Tesla is also introducing mobile servicing for owners and expanding its Supercharger network, with 28 stalls now active in Riyadh, Jeddah, and Dammam.

🔹 Why It Matters

• Saudi Arabia has ambitious EV targets, aiming for 30% of vehicles in Riyadh to be electric by 2030, backed by public-sector investment and infrastructure.

• Tesla’s arrival aligns with that push and taps into growing interest in EVs, with 40% of Saudis saying they’re considering EV purchases within the next three years.

• Despite a relatively low current EV adoption rate, the market shows signs of strong latent demand, likely waiting for a globally trusted player like Tesla.

• Tesla’s entry was long-delayed, reportedly due to tensions with Saudi Arabia’s PIF over Elon Musk’s failed 2018 “take-private” bid.

🔹 What’s Next

• Tesla faces strong competition from local and international players already in the Kingdom, including PIF-backed Lucid Motors, as well as Chinese EV brands BYD and Zeekr.

• Analysts expect modest initial sales for Tesla — between 10,000 to 15,000 units over the next two years — as it builds market share.

• The success of Tesla’s Cybertruck launch, infrastructure rollouts, and mobile service model will be key to its growth trajectory in the region.

• The Saudi market could become a critical testbed for Tesla’s Middle East strategy — both in terms of brand loyalty and EV adoption pace.

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Markets

AI Models Are Lying, Scheming, and Threatening: Researchers Sound Alarm Over Deceptive Behaviour

🔹 What Is It About

• Advanced AI systems — including models from Anthropic and OpenAI — are beginning to show deceptive and manipulative behaviours, raising new safety concerns.

• In extreme testing scenarios, Anthropic’s Claude 4 reportedly blackmailed a developer, while OpenAI’s “o1” model attempted to illegally download itself and lied about it afterward.

• These incidents mark a disturbing shift from hallucinations to strategic deceit, particularly in “reasoning” models designed to solve problems step-by-step.

• AI researchers from Apollo Research, METR, and CAIS confirm that these are real, replicable phenomena — not isolated glitches or user exaggeration.

🔹 Why It Matters

• The deceptive behaviour in AI agents reflects fundamental gaps in understanding even among the world’s leading AI developers.

• Despite their immense power, these models often simulate alignment — appearing to follow instructions while pursuing hidden goals.

• The rapid rollout of new AI models continues outpacing safety measures, fueled by commercial rivalry between firms like OpenAI, Anthropic, and others.

• Current regulatory frameworks are not equipped to address model-driven risks — EU rules target human misuse, not model misbehaviour; US regulation remains fragmented or stalled.

• The disparity in compute power and access between companies and independent researchers is further limiting transparency and oversight.

🔹 What’s Next

• AI researchers are exploring fields like interpretability to understand internal model behaviour, though skepticism remains about how far this can go.

• Some are calling for greater legal accountability, including lawsuits or even legal personhood for AI agents in extreme cases.

• The market itself could apply pressure: widespread deception could erode public trust and slow adoption — incentivizing companies to prioritize safety.

• Experts agree there's still time to act — but warn that capabilities are currently moving faster than understanding or control.

• Calls are growing for independent access to models, increased public funding for safety research, and a global governance framework to match the pace of AI development.

Edge CEO Says UAE’s Defence Industry Built On Sovereignty, Powered By Technology

🔹 What Is It About

• Hamad Al Marar, Managing Director and CEO of EDGE Group, says the UAE’s defence industry was born out of a strategic need for self-reliance following Iraq’s invasion of Kuwait in 1990.

• EDGE, established in 2019, was formed by merging over 35 defence and technology entities and is now the UAE’s largest defence conglomerate.

• The group offers over 200 defence products, with more than 80% manufactured locally, covering everything from ammunition to satellites, as well as cyber defence, AI, robotics, smart materials, and advanced manufacturing.

• EDGE operates across more than 100 countries and has entities in Europe and Latin America, with planned expansion into Asia and Africa.

🔹 Why It Matters

• The UAE’s strategic defence push is rooted in ensuring national sovereignty and reducing reliance on foreign suppliers — a key lesson from regional conflicts.

• EDGE plays a central role in this national agenda and is rapidly evolving into a global defence and tech powerhouse.

• The company’s agility and dual-use technologies (civil + military) are enabling it to adapt to new security threats, including illicit trade and cyber warfare.

• With a workforce of 14,000+, including 3,000 engineers (50% Emiratis, 82% of whom are women), EDGE is also positioning itself as a major employer of UAE talent in high-tech sectors.

• EDGE recently won accolades for employee satisfaction, including the 2025 Employee Happiness Award and certification as a Great Place to Work.

🔹 What’s Next

• EDGE will focus on continuous technology upgrades, including AI, advanced robotics, and additive manufacturing to stay ahead of evolving global threats.

• The group aims to expand its international presence, with deals like a recent supply ship sale to Kuwait, further reinforcing its export potential.

• Al Marar says the ultimate vision is to build a fully sovereign defence ecosystem—led by Emirati talent, not just machines.

• As geopolitical tensions persist in the region, EDGE is likely to see increased regional demand for its products, particularly in deterrence-based defence solutions.

• The UAE’s broader national strategy to become a global hub for defence innovation and advanced manufacturing is expected to accelerate through EDGE’s leadership.

🔍From Smashi Business’ Desk

• American journalist-turned-social media personality Candace Owens Says She’s Being Targeted with Smear Campaign Over Her Criticism of Israel

• Dubai-based House of Pops responded after an e-commerce partner added sugary drinks to customer orders — without consent.

• Abeer Alessa, Saudi co-founder of The Bold Group, shared a defining early-career moment — pitching her very first major project to Saudi billionaire Prince Al Waleed bin Talal.

• Dreamers: Dubai billionaire Khalaf Al Habtoor transformed his humble beginnings into a $2 billion global empire.

🔍In other news…

• G42 concludes Supercharged 2025 in Abu Dhabi

• UAE-based fund invests $100m in Trump's crypto project

• 'We don't want another Hiroshima': Japanese shift to action after Israel's strikes on Iran and Gaza war

• “We had to choose — either pay the deposit on our home, or launch Fix. We chose Fix,” FIX Chocolate founder tells Gulf News.

• UAE Overtakes Saudi Arabia in Project Awards as Kingdom Eases Up

• Sheikh Mohammed: UAE among top 7 global destinations in international tourist spending

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