Russia’s AV Industry Hit Hard by War Sanctions

Roma Nazarov

July 7, 2022

4 Min Read

Several Russian driverless projects have been shuttered and others are facing hurdles caused by economic sanctions following the invasion of Ukraine.

Four months before, TU-Automotive reported that Yandex anticipated the launch of robo-taxi services for US residents, a long-waited yet Covid-delayed event. However, now the future of the pilot is questionable after the flagship of Russian AV industry suspended AV street tests and robotic delivery pilots in the US and laid off employees in its US offices in this March. The Verge credited the company’s press secretary for saying that the authorities of Michigan revoked its vehicle licenses, a version denied by them. These issues are further complicated by a management turmoil since its CEO Elena Bunina resigned in March and left Russia for political reasons and her successor Tigran Khudaverdyan followed after only one day in this role. The company also runs a robo-taxi pilot in Israel, however, its press service didn’t respond to my request on this.

In road freight, Russian carriers are facing disruptions to international trade and cash transfers and a shortage of new vehicles and spare parts, badly affected by the trade sanctions of the West and countermeasures by the Russian government. Also, maintenance costs sharply surged after several foreign automakers had suspended vehicle production and sales in the country.

In this situation, private carriers lost the taste for new technologies, said Andrey Vavilin, co-founder and CEO of BaseTracK : “These days, they’re so concerned about suspended production and import they can’t even think about innovations.” Before that, the carriers projected huge growth, he said. In the last year, BaseTrack installed around 1,000 Level 3 semi-autonomous retrofit kits on regular trucks and enjoyed a confirmed demand for overall 30,000 units. Following progress in AV regulation, the start-up was ready to unmute more autonomy functions and certify them for road use. However, it has now suspended sales in the Russian market: “After this February, our efforts were zeroed and it’s unclear yet to what extent.” The company’s development and manufacturing operations were relocated to EU alongside its headquarters. “However, financially and socially, we suffer certain losses,” he added.

Many AV developers are facing these and other challenges, according to March’s survey by the Russian Association of Robotics (RAR). This conclusion sits well with opinions of nearly ten industry insiders interviewed by the author. Uncertainty is the most frequent concern: “Until now, we can’t say that the situation has become any clearer,” emailed its CEO Olga Mudrova. To help the market players through the challenging times, the association launched a series of group consultations educating them about ways of handling the depreciation of investments and subsidies, a deficit of qualified employees, isolation from the global supply of components and more.

Meanwhile, Russia’s public pilots of connected road infrastructure move on as usual, said Yaroslav Domaratsky, CTO at Sreda Software Solutions, a V2X vendor: “Particularly, the deployment of the connected infrastructure is planned on a highway section and in several cities.” However, he is concerned that the ban on import of sensitive components can decelerate the uptake of new technologies by local automakers such as ADAS and connectivity features. “In the long term, local manufacturing is the only way to guarantee stable supply,” he said. “In this respect, Russian companies have the required level of competencies and development experience. However, production of semiconductors is a bottleneck that can’t emerge without significant support from the state.”

In response to the survey takeaways, the RAR is working on additional support measures to be proposed for consideration by the government. “We have come to a conclusion that AV developers want to be able to faster implement new products,” Mudrova wrote. “For this, essential enabling factors would be simplified technical certification procedures, monetary support to domestic producers and incentives to other industries for the implementation of robotic systems. It’s vital that the companies are given conditions required for production and a market to sell their products.” Also, the technological nature of robotic solutions implies the necessity of support to research and development operations such as backward engineering, a vital technology in times of isolation from the international intellectual property, she wrote.

Meanwhile, the authorities are proceeding with the pre-sanction plan. In March, robo-taxi trips without a safety driver were allowed in two public areas. The government is also working on a subsidized leasing scheme for autonomous trucks, however, this part of work was started a while back.

In future, help can come from corporate consumers in the form of a renewed demand, Vavilin suggested, owing to the driverless technologies’ potential for higher efficiency: “Beforehand, commercial fleets in Russia cared little about it. It's possible that, when there’s more clarity, they will start thinking about ways to push down transportation costs. However, it’s too early to draw conclusions.”

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