Russia earmarks $11 billion for electric vehicle development

A new state program has earmarked 800 billion rubles ($11 billion) to develop electric transport, according to media reports Wednesday. That’s almost twice as much money as a previous version of the program. The program’s targets have also been made more ambitious and now envisage the production of 3,000 electric vehicles in Russia next year. By 2030, annual production should reach 217,000 vehicles. Last year, just 687 electric vehicles were sold in Russia — and not a single electric car was manufactured.

• The budget for Russia’s electric vehicle program through 2030 has increased from 418 billion rubles in an initial version of the program to 804 billion, according to newspaper Kommersant. Most of the money will go toward preferential loans and leasing arrangements for electric vehicles, as well as the roll-out of charging stations. Buyers will be able to claim a 25 percent subsidy when purchasing Russian-made electric cars.
• In addition to existing funds, the government expects at least $1 billion will come from three other sources: a new tax on the sale of traditional cars and two new tariffs on the import of foreign electric vehicles (a 15 percent import duty and a scrappage fee of $5,000 that will rise to $8,000 by 2026).
• Currently, no electric cars are manufactured in Russia. The only existing electric vehicle production line builds electric buses. These are made by Kamaz, better known for its trucks, and purchased by Moscow City Hall. The new program assumes three companies will be mass-producing electric cars as early as next year: Kamaz (which has a prototype vehicle), the Avtotor factory that assembles BMWs and other foreign cars from ready-made kits, and the little-known Motor-invest, which manufactures the Chinese Chang’an and was close to bankruptcy in March 2021.
• Experts interviewed by Kommersant described these plans as unrealistic. However, the criteria for determining whether an electric car is ‘Russian’ or not are flexible. For now, a car merely needs to be assembled in Russia to be classed as Russian. That means that everyone — with the possible exception of Kamaz — will simply churn out foreign cars in Russian factories. Avtotor is already discussing this sort of arrangement with South Korean manufacturers Hyundai and Kia.

Why the world should care: Russia lags far behind other countries when it comes to electric vehicles. Last year, just 687 electric vehicles were sold in Russia – 430 times less than in the U.S. and 2,000 times fewer than China. This is despite the fact that import duties have, up to now, been zero.