Government EV Strategy might Hinder Private Investments

Russia’s EV strategy 2030, issued by the government in August, suggested that the authorities are, finally, taking a steady course in green mobility.

This was good news for the industry. However, EV lobbyists had raised concerns, before the event and immediately after it, about multiple imbalances in the strategy such as too early hurdles to import, a lack of support to heavy-duty vehicles and overtly optimistic forecasts. This autumn, new arguments had emerged. In one instance, I attended a debate held by National technological initiative Autonet in Moscow where some market players had criticized the charging infrastructure policies.

According to the document, covering up to 60% of the purchase and installation costs of a charging point will attract third-party investors and result in 9,400 charging points deployed by 2024 to reach 72,000 by the end of the decade. Nevertheless, the panelists argued that indiscriminate support can, on the contrary, repress private investment. Instead, the government should aim support only at low-density traffic areas to resolve the “range anxiety” issue, said Alexey Leonov, general director at Enel X Russia. By doing this, they can secure availability of charging stations on all major roads within an EV’s range. On the other hand, profitable locations should be reserved for private investors. “Otherwise, unsubsidized stations will have to compete with subsidized ones and inevitably lose,” he pointed out.

The authorities’ focus exclusively on passenger cars has taken aback Vakhtang Partsvania, head of sustainability and government relations at Scania Rus. At this stage, commercial fleets’ readiness for EVs is better than that in private drivers, he said. Particularly, urban commercial vehicles, namely delivery trucks and street cleaning machines, finely suit the cities’ needs of quietness and clean air while posing low requirement on battery range. However, truck charging infrastructure is missing in the list of supported industries: “For ten more years, commercial EVs will remain in the margins,” he said.

Andrey Jumaev, general director of GlobalLink, project Electrozapravki.rf, is concerned about free charging services under development in a number of Russian cities. A seemingly virtuous policy, it pushes independent charging service providers away from the cities. “The charging services must be paid,” he said. “Many drivers criticize me for that but I insist that large networks of free charging stations depress private investors’ interest to this market.”

In manufacturing, the authorities conceive to apply a mix of protective and financial policies to establish independence from foreign manufacturers throughout the production cycle of EVs from raw materials components to batteries and electric motors, production of vehicles and recycling. Thanks to these measures, nationally produced EVs are forecasted to comprise 10% of all the vehicles sold in the country by the decade’s end.

Despite the fact that mass production of electric cars and trucks in the country is unlikely to start before 2023, the government aims to introduce the protection as early as the next year. These days, Russia is pushing on the member states of the Eurasian Economic Union to raise tariffs on imported EVs since 2022. This move has attracted especially severe and ever-growing criticism from the industry, including national and foreign manufacturers, car dealers and MaaS providers. “Imported cars can help to form the demand base for the national manufacturers,” said Daniil Petin, head of electric cars at Didi in Russia. “In this regard, the Russian authorities should benchmark their policies against the neighboring countries. Take a look at Belarus and the Ukraine, they had opened their borders to foreign EVs and, these days, the electric fleet in small Belarus has reached 5,000 units while, in the larger Ukraine, it’s 120,000 units.”

Establishing a full-cycle manufacturing industry is an overtly ambitious goal, thinks Partsvania. He asked: “Do we really want to try to achieve all that goals at once?” To integrate into the global supply chain with a small array of deeper competencies has proved to be a more advantageous strategy, he suggested. A number of other panelists agreed and assumed that Russia could benefit from its rich mineral resources by putting forth production of lithium for vehicle batteries and electric motors.

I passed these arguments on to Grigory Mikryukov, head of manufacturing industries and environment at the analytical center for the government of Russia, during an online gathering entitled Autostat Analytic Break. “Evidently, e-mobility industry is in the need of support and development, however, individual segments to cash in on hasn’t been clearly indicated yet,” he said. “The strategy is a framework document that establishes the general vector of development. Previously, we had often been asked, ‘Why don’t you have this vector’. Now we have it and I think that the exact directions of support is an imminent matter.”