Electric Cars in Russia Ready for a Breakthrough

The Russian industry of electric cars is steadily developing, thanks to the ever growing demand for electric cars among the local population and the current state efforts to popularize their use in the country, according to recent statements of some leading local experts in the field of automotive and senior officials of the Russian Ministry of Industry and Trade. 

Last year the development of electric cars was declared as one of the priorities for the state in the field of domestic automotive industry for the next several years, which was confirmed by the Russian Minister of Energy Alexander Novak. According to Novak, the share of electric vehicles in the overall structure of car fleet in Russia should reach 8–10%, up to 200,000, by 2025. At the end of 2018 the fleet of such cars in Russia varied in the range of 10,000-11,000. 

The implementation of these plans will be to reach this goal, which was recently approved by the Ministry of Industry and Trade of Russia. 

Russian Government Strategy

The Russian state strategy includes a number of measures to stimulate the development of electric transport in Russia and to create conditions for its popularization among the local population. 

As part of these plans, the government plans to allocate funding for the conduction of R&D activities in the field of electric cars and the establishment of their production within the territory of Russia.

The new strategy also involves the development of refueling infrastructure and the provision of numerous benefits for owners of these cars. 

Among these benefits are the permission to move on bus lanes, free parking, zeroing the utilization rate for five to seven years and some others. 

So far, the authorities of Moscow and St. Petersburg, have already approved the provision of free parking for electric cars within the boundaries of both cities. 

The government hopes the use of electric cars could be of interest for domestic customers, especially due to the ever raising fuel prices in the country. 

Designing new legislative frameworks that will better regulate the use of electric cars in Russia is also part of state plans. 

The government also plans to abolish customs duties on the imports of electric cars in Russia. The latter measure is considered as very important for a further development of the industry, taking into account that the existing duty adds additional 15-17% to the final cost of an  electric car, imported to Russia, while its lifting will provide additional cost savings to local customers. 

The government is also ready to ease the requirements for the installation of the ERA-GLONASS system – a Russian state emergency response system to road accidents – on electric cars. In accordance with the current Russian legislation, all cars imported to Russia should be equipped with such system. This norm often sparked criticism from both auto producers and importers, as it often led to the growth of their costs. It is planned, in the case of electric cars, this norm will have a status of just advisory. 

The government also has plans to use the experience of China and plans to consider the possibility for the provision of a special subsidy for Chinese customesr, purchasing an electric car. 

In the meantime, there is a possibility that regional governments will provide additional benefits, apart from those, that will be provided by the federal government. For example, the Moscow city government has recently approved lifting transport taxes for electric cars, while the same option is currently considered by the authorities of other Russian regions. 

Increasing Demand for Electric Vehicles

In recent years, the demand for electric cars in Russia has significantly increased. This is also reflected by recent statistics of the Russian Ministry of Industry and Trade, according to which sales of electric cars in the largest cities of Russia, (particularly Moscow and St. Petersburg), in 2018 grew by more than 150%, compared to 2017, despite a nearly 40% price increase.

The published statistics also shows the Nissan Leaf as the most popular electric car in Russia for the first half of 2018, as it accounted for almost 40% in overall sales of electric cars in Russia in 2018. Among the other best-sellers were the Mitsubishi i-MiEV and Tesla Model S. 

Leading Russian automakers and global majors, operating in Russia, have generally welcomed the new state initiatives; however, they have said that existing problems will prevent rapid development of the industry.  

Vasily Melnikov, director of corporate communications at BMW Group Russia, a Russian subsidiary of BMW, said despite the fact that the Russian market of electric cars is gradually growing, its further development is prevented by high cost of these cars. 

Melnikov also added that present the market is mostly oriented on customers from the high-income segment, since only customers from this category can provide themselves with the necessary infrastructure to use their electric vehicles. 

According to Sergei Ilinsky, the official representative of Russia’s flagship automaker AvtoVAZ, the company is ready for the beginning of commercial production of electric cars, although these technologies are quite expensive for the mass segment, where most of the products of the company are positioned. 

In the meantime, an official spokesman of the Russian leading truck maker ‘KamAZ’ said the transition to electric vehicles in Russia is important mainly due to ecology issues and the complex situation with the environment, taking into account that transport currently produces about 80% of harmful emissions in large cities of Russia with a population more than 1 million people. 

Challenges of Electric Vehicle Charging Infrastructure

Still, according to Mikhail Blinkin, Director of the Institute of Economics of Transport and Transport Policy of the Higher School of Economics (and one of Russia’s leading experts in the field of electric cars), the transition to electric cars in Russia will be complicated by specific urban environment of the majority of Russian cities where people mostly live in high-rise houses of 15-20 floors. This creates additional problems for the installation of charging infrastructure for electric cars, Blinkin added.

In the case of charging stations, at present their total number in Russia exceeds 400 units; however, according to state plans, these figures will be increased up to 3,000 already by the end of the current year. 

That will be also achieved due to a recent state decision to include charging stations for electric vehicles in the list of minimum required services provided by road service facilities in Russia starting from 2019. This will contribute to more  charging stations in the country, according to state plans.

In 2015, Renault signed an agreement with Rosseti, one of Russia’s leading power companies, for the establishment of charging infrastructure for electric vehicles in Russia. In February 2017, during the Sochi Investment Forum, the government officially approved the establishment of special “green zones” within the Sochi, Adler, and the Olympic Park, that will be accessible for electric vehicles only.

In addition, as part of the latest state plans, St. Petersburg will be the first city of Russia to have selected areas completely switched to electric public transport. The experiment will start in May 2019 and will be limited to the Vasilievsky Island, one of the histrorical areas of the city. 

At present, St. Petersburg remains one of Russia’s most developed cities in terms of electric transport technologies, taking into account that the city currently has about 100 charging stations for electric cars, which is a record figure for Russia, according to Iya Gordeeva, general director of AuditEnergo Group, one of Russia’s developers and supplier of charging stations.