Although internal combustion engines are expected to remain dominant in Russia – where a preference for larger cars and lack of government subsidies hinder the growth of electric vehicles and hybrids – the countrys lubricant manufacturers seek opportunities abroad as they assess the shift towards EVs and hybrids elsewhere, industry insiders said.
Other geographical and environmental factors can limit the penetration of electric vehicles and hybrids in Russia – such as long distances between cities and severe climate conditions – Artem Mazaev, an independent consultant in the lubricant industry, told Lube Report.
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The average distance between cities should not exceed 300 to 400 kilometers, which approximately reflects the capacity of a cars electric battery. In Russia, road distances between cities can be over 500 kilometers or even 1,000 kilometers, Mazaev said.
He said that the Russian government is focusing on sales of petrol and diesel produced from local hydrocarbons and is not interested in development of alternative sources of energy – the lack of governmental subsidies makes the price for EVs uncompetitive. The Russian automotive market is a safe haven for internal combustion engines. In the 20 to 40 years perspective, this market will remain a kingdom of internal combustion, he noted.
According to Moscow-based consultancy Russian Automotive Market Research, Russia had 43 million on-road passenger cars in 2017, and only 0.5 percent of this number were hybrids and 0.006 percent of it were electric vehicles. The consultancy expects the number of on-road passenger cars in Russia to increase to 47 million by 2023, but the share of hybrids and electrics to remain almost the same – 0.6 percent and 0.007 percent of the total respectively.
Russia has a lot of company for not having jumped on the electric bandwagon. The vast majority of EV sales occur in no more than 15 countries, most of which offer significant financial incentives to make them more affordable. A number of these countries are seeing triple digit increases in annual sales.
Across much of the globe, though, EV numbers remain miniscule – partly because individuals cannot afford them and governments have not found resources for subsidies, partly because lack of charging infrastructure would make them impractical to use even for those who could afford them.
In addition to a lack of subsidies or charging infrastructure, he said, Russia is also missing a couple other attributes that help encourage EV sales: consciousness for a cleaner environment and the popularity of being green among the younger generations.
These traits are hardly inherent to Russian motorists. They like bigger cars, and being an owner of an electric vehicle is considered as rather fancy – it is not driven by the care for the environment, he said.
Regarding the gradual shift towards electric vehicles in some countries and the threat they pose to the lubricant manufacturers, Russian lube producers do not react locally but rather look for opportunities abroad.
Russian lube manufacturers receive the requests from the companies that operate their international business to evaluate the EVs threat on their business. On the other hand, the Russian national blenders goal is to increase their market share within the country, Mazaev said.
Gazpromneft-Lubricants echoed his observations.
We actively expand our geographical footprint, including in the countries of the European Union and Southeast Asia, where we observe penetration of the alternative means of transportation such as electric cars and hybrids, said Nikolay Doroshenko, the companys head of product development and management department.
Doroshenko said that the company has already started to develop finished lubricant products which can be used in the electric cars and hybrids of such car brands as Tesla, Toyota, Nissan or Smart. The company monitors the market demand for parts and fluids for EVs. As soon as the demand becomes significant, he said, it will offer supplies to the market.