China-Driven Electric Hype Boosts EV Market in Russia

Two new BEV brands were established in Russia in 2022 and mass production launched owing to technological support from Chinese automakers.

In September, Russian automaker Motorinvest launched production of battery-electric C-class sedans and CUVs at its car factory in the Lipetsk region. According to the company, these are licensed copies of models of Chinese origin, assembled from parts made in the PRC. Independent sources reported numerously that the supplier for this project is Dongfeng Motor though it shuns from confirming its participation.

On October 23rd, newly formed carmaker Moskvich launched production of compact CUVs at Renault’s former car factory in Moscow, including a battery-electric version. Renault sold 100% of its shares in the factory to the government of Moscow in May, last year, as a part of the French company’s efforts to leave the Russian market. In a similar fashion to Evolute, Moskvich’s first model dubbed Moskvich 3 is a licensed copy of a crossover by Chinese company JAC Motors.

More such schemes of Sino-Russian cooperation are expected to emerge this year. By January 13th, Russian companies Alfa Tech and Avtotor pledged to launch production of copies of vehicle models by FAW and BAIC, as alleged by Russian business edition Vedomosti.

Russian initiative

Last year, new car sales in Russia slumped by roughly 60%, adversely affected by the consequences of the invasion of the Ukraine (our sister edition Wards Auto published a piece on this  by Eugene Gerden).

The only exception are battery-electric cars surging by 33%, according to analyst firm Autostat. Particularly, in the last pre-war month of February, sales figures almost quadrupled from the 2021’s level. Although the share of BEVs remains relatively low at less than 1% of new cars sold, consumers’ enthusiasm about them is growing in strides. A December’s poll by analyst Autostat has shown that 32.7% drivers consider buying an electric model when shopping next time.

However, all major BEV makers suspended import of vehicles to Russia in the spring of 2022 in their reaction to the range of issues caused by Russia’s aggression and technological sanctions were introduced by the OECD countries, causing new car registrations to plunge.

Seeking help from China is a way of plugging the gap caused by the loss of vehicle supply, said Tatyana Grigoryeva, general director at consulting firm AutoBoss.  The BEV projects in question were, most likely, initiated by their Russian parties. For Motorinvest, it’s a way to load capacities of factories left by the Western automakers and save jobs. Furthermore, it’s also a signal to the population that the auto industry is alright. Unlike it, Moskvich pledged to start from copies of Chinese EVs as a temporary solution and later develop an original model lineup.

For Chinese companies, selling manufacturing licenses is an unusual practice. Yet, they see it as a once-in-a-lifetime opportunity to earn by selling low-tech products, she said. Compact sedan Evolute i-Pro provides a good example being a copy of Dongfeng Fengshen E70. Which, in turn, is based on the 2000 Nissan Sylphy converted to battery-electric propulsion.

E-mobility under sanctions

By the year’s end, the steep growth trend returned owing to both the legalization of parallel import and the local production of vehicles, emailed the press service of car dealer Avtodom. Nevertheless, it cautioned against forecasting high volumes of BEV sales for 2023. In the near future, the market will see a period of adaptation to life under Western sanctions. In this part, much will depend on the success of such projects as Evolute and Moskvich, Autostat’s general director Sergey Tselikov said at its recent in-house conference for vehicle resellers: “If mass production will continue through the next year, we’ll see tens of thousands vehicles sold. Otherwise, a two-fold increase is the most possible.”

Significant risks remain for such projects, said Grigoryeva. Beijing is not interested in annoying its main trade partner the US which, for the Communist Party, is a far more important partner than Russia. Eventually, it can result in ordering a halt to Sino-Russian cooperation projects.

Right now, Chinese automakers are wary of all sorts of self-promotion in regards to these projects, she said: “For example, their representatives don’t show up at industry gatherings in Russia even as listeners, presumably, because the companies are concerned over possible secondary sanctions and issues with suppliers from OECD countries. Yet, they cannot withstand the temptation to make money on us.”