Electric vehicles are expected to be used at resort cities

Electric vehicles are expected to be used at resort cities

Expert Reports  

The share of electric vehicles (EVs) in the Russian market is expected to grow steadily; first of all, they are in demand for use in national parks and resort cities, experts say.

An electric vehicle is still a luxury in the Russian market today, rather than a means of transport. Its full-fledged implementation is hampered by low domestic output and insufficient number of charging stations and points. However, the situation should change in the coming years.

Although vehicles with internal combustion engines on the Russian roads still make up 98.4 percent of the total vehicle number, and the ICE vehicles have an absolute monopoly. According to Alexey Tselev, Deputy Director of the Department of Automotive Industry and Railway Engineering of the Russian Ministry of Industry and Trade, electric vehicles are rapidly gaining popularity. Based on the results of the first four months of this year, sales of EVs in Russia approached 9 thousand, which is over 3 times more than a year ago. At the same time, the share of electric vehicles manufactured in Russia amounted to 17 percent.

EVs are especially welcome where the environment does not ‘agree’ to a compromise, for example, in national parks and eco-resort cities. Special tourist electric buses are already running in the Kislovodsk Park and in the south of the country. However, the regions developing eco-tourism are going to improve the situation with using electric vehicles. For example, an effective incentive in Dagestan was that all EVs were exempt from transport tax. And most likely, other regions of the country will follow this example. exempt from taxes

What are we switching to?

In 2022-2023, several projects for manufacturing electric vehicles were launched in Russia. Their manufacture was launched at the Motorinvest factory in Lipetsk and the Avtotor factory in Kaliningrad. The Moskvich EV manufacturing factory was put into operation in Moscow. In the third quarter of 2024, the LADA e-Largus, highly indigenized electric cars, are expected to roll off the assembly line in Izhevsk (Republic of Udmurtia, Russia). In parallel, the manufacture of electric buses and electric trucks is under development at the factories of the KamAZ and GAZ groups and the Manufacturing Rus factory in the Leningrad Region.

As part of the government concept for the development and use of electric vehicles and the federal project dubbed Electric Vehicle and Hydrogen Car, 250 thousand electric vehicles should be sold per year in Russia by 2030, with a market share of 15 percent, and the market share of EVs should reach 25 percent by 2035.

What about charging facilities?

Currently, the majority of batteries in domestic electric vehicles are imported ones. However, two plants in Moscow and Kaliningrad for manufacturing the domestic lithium-ion batteries are under construction by the Rosatom State Corporation, and a joint venture between Rosatom and Norilsk Nickel has started the development of the lithium deposits in the Murmansk Region, says Yuri Fyodorov, Deputy Chairman of the Federation Council Committee on Economic Policy, Business and Ownership. In the city of Glazov in Udmurtia, the manufacture of rare-earth magnets is launched that are set to be used in electric motor vehicle industry.

The creation of charging stations is of great importance - not only slow and fast charging stations, but also ultra-fast ones, they are expected to be like hubs located on interurban arterial highways. The RusHydro company is implementing the New Silk Road project to build a network of fast charging stations that will allow driving electric vehicles from Moscow to Vladivostok. Sitronics (AFK Sistema) is implementing a similar project in the North-South direction - to Sochi and the Russian-Abkhazian border. Andrey Gurlenov, CEO of Sitronics Electro, says that the company is ready to quickly increase the number of electric charging stations in the near future by relocating some of the charging stations that are near the border with Finland as they are currently unused there.

Experts say that for the effective implementation of electric vehicles, it is important to consider the construction of charging facilities at the design stage of residential and commercial area development. In other words, it will be possible to make electric cars truly popular with Russian people as soon as the issue of placing charging points in residential buildings is resolved, and clear corresponding regulations for buildings under construction should be worked out.

Other incentives

Today, all buyers of Russian electric vehicles can receive a discount of up to 925,000 rubles under the preferential car lending and the preferential leasing programs. The increasing of the discount to 2 mn rubles is under consideration now for medium-duty trucks and minibuses. Additionally, it is proposed to include electric buses in the programs aimed at updating passenger public transport.

Another possible option for stimulating the electric transport development is to subsidize free travel on toll roads for owners of electric vehicles for a period of one to several years. This may apply to both privately owned electric cars and taxis, car sharing, as well as trucks and electric buses.

Experts consider direct subsidies for the manufacture and introduction of such components as batteries, invertors, electric drives, and control units as important incentives. “The regulatory framework has not yet formulated the mechanisms for stimulating the indigenization of imported technology of electric vehicle manufacturing and the state support measures for the level of indigenization. In particular, there are no effective incentives for the purchase of Russian-made lithium-ion batteries,” says Viktor Lashkaryov, Minister of Industry and Trade of the Republic of Udmurtia. The situation is the same with the state preferential leasing program. According to him, a way out of the situation may be in including the gradually increasing requirements for the indigenization of imported technology of electric vehicle manufacturing in the Government resolution that will relate to the manufacturers that want to be included in the state preferential lending program.

What is the situation in other countries?

Last year, 14 mn electric vehicles were manufactured in the world, and 17 mn EVs were made this year. Today, this market is completely dominated by China where half of all electric vehicles are manufactured. The EU countries account for 25 percent of the production, the USA account for 10 percent. These countries have the greatest number of electric vehicles on their roads.

To stimulate the transition to electric vehicles in China, for example, urban planning departments take into account the need to have appropriate charging facilities, and approximately 10 percent of gas stations have chargers for electric vehicles, says Andrey Kuvshinov, Director of the Rosenergoatom’s department. In the USA, a cashback program is offered for the purchase of electric vehicles, including used EVs. In California where a third of all American electric vehicles are registered, there is an offer to pay $9.500 when selling a car with an internal combustion engine, and the money can be spent on buying an electric vehicle like an electric car or electric bicycle.

Belarusian colleagues also have an interesting experience in stimulating the use of electric vehicles. In particular, VAT exemption for electric vehicles, tax exemption for the construction of electric charging stations, the number of which has doubled in the country over the past 4 years and reached 1,200, as well as an incentive tariff for electricity. According to Oleg Zhuravlyov, Head of the Minsk Automobile Plant’s (MAZ) Marketing Department, the most promising concept is night charging. “The Republic of Belarus has introduced lower ‘night’ rates for charging the electric vehicles. This allows us to smooth out peaks in electricity consumption during the day and night.”

There is a town service electric bus among the new models offered by MAZ, as well as an electric apron bus for transporting passengers at airports, and their mass production is expected to be launched soon. The development of medium- and large-capacity electric vehicles for truck haulage and the trucks for utility service providers is underway. Other interesting areas of use are also possible; in this regard, the MAZ factory sees promising prospects for synergy of its potential with that of the Russian manufacturers, says a representative of the Minsk Automobile Plant.

On the other hand

Igor Sechin, CEO of Rosneft, said in his presentation at the St. Petersburg International Economic Forum that electric vehicles were not a panacea for all environmental problems; demand for them in the world market was slowing down.

According to Sechin, in addition to the high price for EVs, there are a number of issues that should be solved to make the widespread introduction of electric vehicles possible. These include insufficient drive range, poor charging infrastructure, recycling the used batteries, shortage of critical metals and the environmental impact of their mining, as well as road safety concerns.