Electric vehicle sales in Russia are set to grow 40% to 45% from 2021 to about 3,000-3,500 units this year, according to auto analytics agency Autostat, but with transport being the costliest element of the country's Rb 480 trillion ($6.36 trillion) decarbonization plan, analysts fear the mass adoption of EV may spill over to 2060.
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In 2021, the sales of new EVs in Russia tripled to 2,254. Russians also bought 9,070 of second-hand EVs last year, almost 70% more than in 2020, and the overall number of EVs registered in the country now stands around 13,000. However, this still makes up a tiny share –- only 0.03% -- of the overall car fleet in Russia, which in 2021 stood at 45 million, said Autostat.
With this year's sales of both new and used vehicles, the country's EV fleet may almost double, but will still be less than 1% of all the cars on Russian roads, as per Platts estimates.
Replacing traditional internal combustion engine vehicles, or ICEVs, with EVs comprises the bulk of the Rb 145.4 trillion cost involved in the complete decarbonization of transport, according to the Moscow-based VTB Capital. The investment bank estimates that this makes up a third of the total needed to achieve full decarbonization of the Russian economy by 2060 that the country has committed to.
The decarbonization of households involves the mass replacement of ICEVs with EVs and is one of the most expensive areas in the overall decarbonization task, according to VTB Capital.
What Russia faces is the same massive social and infrastructure capex costs that most major economies are going to face over the next five to 10 years, said Tom Price, head of commodities strategy at the UK-based brokerage Liberum.
Norway excels, China testing ideas
"We are at the start of the transition. [EV ownership] is not yet a widely accepted shift in any major economy except for perhaps Norway, which has reported a dramatic shift in the last couple of years," said Price.
But Price added that a lot of countries are still trying to figure out basic things like, "can power utilities support recharge of the nation's cars within six-hour time frame, while everyone is asleep, or can distribution networks support recharging units around the major centres."
The analyst suspects China will come up with a solution to offer to the world because "they are the ones doing most of the work on how to get the most out of the existing power distribution network."
China is retro-fitting cities with recharge networks, and even building an EV-friendly town -– just over 100 km out of Beijing.
"They are tasting some ideas and if they get it right it could be the blueprint on how we upgrade transport systems and roll out EVs around the world," said Price.
The future of cars
Russia is yet to produce its own EVs as all the electric cars sold in the country are imported.
There are quite a few questions to answer and a few problems to solve before EVs will be able to take over ICEVs completely, said Boris Krasnozhenov, head of research at Alfa Bank.
"There are about five-seven competing battery technologies, and all should be improved in terms of letting the battery hold a charge for longer. Another key issue –- finding a cobalt-free solution –- the metal responsible for the longevity of charge [and the one mined in too few countries], remains unsolved too," he said.
Talking about the mass adoption of electric vehicles, Krasnozhenov said the process also involves rethinking cities infrastructure, but at the moment there is only a vague idea as to whether cars in personal ownership will still prevail in 2060, or whether there will be mainly vehicles in collective usage and those that do not need a man to drive, which then requires the development of artificial intelligence and data storage infrastructure.