Sollers Focus on EV Care Share even before Making Them

By Roma Nazarov

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13th December 2021

A mere six months ago, Sollers was keeping silence on its strategy in EVs.

Finally, this autumn, the company has made its first practical moves in this direction, possibly in response to the Russian government’s brand-new strategy 2030 in support of electric transportation. In customer service, Sollers will deploy and operate Russia’s first fully electric carsharing fleet in Russia’s Far East in partnership with power generation company RusHydro. The partners enjoy the region’s rich hydropower potential and confidence of consumers in EVs. In this JV, the automaker will contribute its expertise in car subscription and fleet management while the generation company will provide charging services.

As to vehicles, the automaker’s first mass-production BEV will be a version of its icon UAZ Hunter, a half-century old SUV developed for the army and still loved for its durability and simplicity. A product of the automaker’s other partnership with Czech car tuning specialist MW Motors, the EV boasts 163hp electric motor, quite a lot for the light vehicle, while a 62kWh battery pack secures 75-mile range even on rural roads.

The vehicle has already been in small-scale production at MW Motors for a while. “Since 2022, UAZ will produce the vehicle in Russia for ecotourism and nature conservation officers as well as for the foreign markets,” said its press secretary Alina Komarova.

Sollers is best known for its UAZ-branded off-road vehicles while it is also a manufacturing partner of Ford, Mazda, Isuzu and Aurus. Until this autumn, the company has been remaining a traditional ICE vehicle manufacturer. However, this business model based on decisions made before the EV market gained momentum, no longer matches the new challenges.

Essentially, the company is in a too-early-too-late situation. On one hand, the national automakers are lagging behind in EVs because, lacking a state-wide EV strategy, they’ve been seeing ICE powertrains as a safe bet until recently. “Possibly, the Russian automakers are coming late into this market,” said Alexander Gurko, co-head of the working group Autonet and president of NP Glonass. “Because of many technological barriers and severe competition, joint efforts are necessary to accomplish the national EV strategy.”

On the other hand, weak demand for EVs cannot, presently, help a mass-market automaker, especially in the UAZ’s target rural market. A recent analysis by car sales marketplace Drom.ru revealed that one-in-three consumers reject EVs because of their price while one-in-four because of a lack of charging infrastructure (notably, Auto Trader has recently found similar issues with British car owners). Also, BEVs loose value sooner than ICE vehicles, an important issue for UAZ vehicles because of their averagely long lifespan. Major automakers such as Nissan can produce EVs at no profit for years in order to get the consumers gradually used to it. However, UAZ, a niche manufacturer, cannot afford it.

“My initial thoughts on electrification in poor regions of the world is that it poses many challenges,” emailed Ryan Citron, senior research analyst at Guidehouse Insights. “These regions have far less charging infrastructure developed, lower consumer purchasing power [and EVs are typically more expensive upfront compared to ICE vehicles] and smaller sales volumes. There is also a pattern of domestic manufacturing protections in many of these countries. These protections usually require vehicle automakers to invest in manufacturing capacity in the country or region in order to enter the market, rather than being able to just ship EVs to these countries or regions. This makes the deployment of market leading technologies like EVs very risky and expensive.”

Possibly, UAZ’s toughest decision, announced in this November, was to close the on-going development projects on future ICE vehicles. However, the company had no choice because it lacks necessary funds, its CEO Adil Shirinov said in an interview for news site Business Online: “Investing in independent development from scratch is extremely burdensome.”

Instead, Sollers will pursue more partnerships or alliances. “In this efficient and smart solution we see the synergy of manufacturing capabilities and product applications,” said Shirinov. “We want to be an attractive asset.” For this, the company is boosting its expertise in EV manufacturing and mobility services such as car-sharing and subscription.

For example, Sollers can benefit from being a Ford’s manufacturing partner. By 2023, production of the battery-electric Ford Transit will start at the Russian company’s manufacturing facility, said Komarova. Another partnership in consideration at Sollers is Rosatom, a nuclear power generation company who recently claimed plans to produce vehicle batteries. She added: “We’re also studying opportunities to produce electric cars in the Russian Far East. Unfortunately, that’s all I can say, for now, on our e-mobility plan.”