Russia’s EV Strategy Far from Clear

The strategy in support of electric mobility 2030, issued by the Russian government on August 23, 2021, is strongly tilted to five manufacturing targets and only three for deployment of infrastructure.

The authorities framed a plan consisting of versatile monetary and non-monetary incentives with expectations that national EV sales will exceed 15% of all vehicles by 2030. Simultaneously, the EV charging network is expected to reach 73,000 charging points.

Yet, the government’s main ambition lies in development and production of EVs plus key components such as batteries and electric motors. For example, the strategy anticipates battery production at state-owned company Rosatom to start by 2025 and reach 2GWh per year in the decade’s end. All this to give the domestic automakers an advantage. According to the plan, 10% of vehicles produced in the country in 2030 will be electric.

The strategy indicates that the government has finally set a steady course. “It establishes road marks that will help to pull Russia out of oblivion in the area of electric mobility,” said Iya Gordeyeva, chairwoman at the Association for the Development of Electric, Unmanned and Connected Transport and Infrastructure (AETI) and a member of the document working group. Most importantly, she hopes that the incentives will shape the possibility of mid-priced vehicles: “There’s a strong unsatisfied demand in passenger cars from taxi and car-sharing providers as well as private car drivers in the price segment $20,000 to $27,000 worth 6,000 to 8,000 vehicles per year.”

Still, the strategy remains controversial in certain parts because it has to balance the interests of many conflicting parties. In one instance, it predicts the share of EVs in national vehicle sales to grow from current 0.1% to 1.7% – seventeen-fold – as soon as 2022. Gordeyeva said she had been surprised to see these last-minute changes from the working group’s initial suggestions.

Possibly, these and other controversies are the reason why the national automakers remain sluggish in reaction to the government’s initiative. As of today, Avtovaz is the only Russian automaker who responded by stating that it “could start mass production of electric cars by 2027 or 2028”. The company is specialized in B segment and B+ passenger cars and small SUVs so it’s safe to assume that its future clean vehicles will belong to these size segments.  Large SUV and truck maker, UAZ’s press service confirmed it doesn’r produce EVs and withheld commenting on its future green lineup.

Russian manufacturers such as Avtovaz, Kamaz, Gaz and UAZ are strong in the domestic market owing to vehicle lineups finely tuned to the needs of the local consumers. However, what constitutes the basis of their success is also their main weakness because they depend greatly on sufficient demand in the market when trying to present new models. Sergey Ilinskiy, communications director at Avtovaz, recently said to TU-Automotive that the company doesn’t see an economically justified demand in the mass market. Truckmaker Kamaz’s PR director Oleg Afanasyev agreed that the company’s future roll-outs will be “strongly tied with existence of a sustained demand and readiness of infrastructure”.

At the same time, the automakers are anxious not to lag behind, thinks Azat Timerkhanov, press secretary at Autostat. Technically, the majority of the companies are able to present electric versions of their flagship vehicle models shortly. Being Renault’s subsidiary, Avtovaz benefits from access to the French company’s technologies for faster roll-outs. Kamaz earlier pledged to present a battery-electric heavy-duty truck by 2023 and, a year later, a battery-electric A-segment car and fuel-cell transit bus. Gaz has recently started production of battery-electric minibuses.

In 2019, TU-Automotive reported that Russian start-up Zetta was expected to start production in the same year. Unlike the aforementioned local automakers, its affordable electric minicar was aimed at the markets of Europe and Middle East. However, a lack of private investors forced the company to seek funds from the government which refused to cover the start-up’s liquidity issue in 2020. Currently, it hasn’t started production yet. However, the government is pressing the company to push forward. Russian minister of trade and manufacturing Denis Manturov said in a recent interview for TV channel RBC: “We count on the production launch by the year’s end.”

The strategy remains unclear in areas such as the sources of financing the monetary benefits suggested to the consumers and automakers.

“It is obvious that the future belongs to electric vehicles or cars using more environmentally safe engines,” said Russian prime minister Mikhail Mishustin when presenting the document. “We expect that putting the ideas and solutions of the strategy into practice will help us to develop our own electric car industry.”