The British luxury marque, owned by India’s Tata Motors, signed the deal to look at the possibility of making 50,000 Land Rovers a year at a Saudi plant costing some 4.5bn riyals (£744m), the country’s commerce and industry ministry said in a statement.
A spokesman for JLR said the agreement was “purely exploratory” and it was too early to provide any details.
JLR has seen huge demand over the past year from emerging markets such as China, Russia and countries in the Middle East for its luxury SUVs and sleek sedans, offsetting sluggish growth in developed markets.
The company and its Chinese partner Chery Automobile said last month they had laid the foundation stone for a factory near Shanghai.
“I can’t make any statement for these kind of investment figures. We have just signed a letter of intent,” said JLR chief executive Ralf Speth.