Electric Cars In Russia To Be Exempt From Toll Road Payments

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Toll Road & Bridge, St.Petersburg

Increasing Russian EV incentives offer foreign investment opportunities

In further moves to stimulate the electric vehicle market, Russian electric car drivers will be able to access toll roads at no cost starting from 2022, according to a recently published draft government plan.

The initiative, part of the new Development Concept for the Production and Use of Electric Automobile Transport signed by Prime Minister Mikhail Mishustin on August 23, aims to encourage the adoption of electric vehicles among the public. The government’s plan expects Russia’s annual electric vehicle sales to reach 25,000 by 2024 and make up 10% of Russian car sales by 2030 compared to its current share of 0.05%. China’s Minister of Commerce recently stated that the Russian EV market was a ‘substantial opportunity’ for Chinese auto manufacturers.

To grow the EV market share, the Russian government also plans to develop a system of subsidized loans and leases to incentivize EV purchases. Manufacturers in turn will get subsidies for building new EV and battery factories, according to the plan.

Of Russia’s 1.553 million km of road, some 50,000 km are federal highways, with just 1,950 km, or roughly 0.02% of the country’s road coverage, are toll roads. However, these tend to operate the popular fast lane highways between major cities such as between Moscow and St.Petersburg.

The government has planned for 9,000 EV charging stations across the country by 2024, a number that officials hope could reach as high as 72,000 by 2029. The government also plans to make 1,000 hydrogen stations operational by 2030. Combined, these efforts are expected to create 39,000 new jobs in electronics and other high-tech sectors. Russia plans to invest US$10.5 billion into electric vehicles and hydrogen transport by 2030.

To date, Russia has focused its EV investments on public transport. Nationwide, 0.6% of buses run on electricity, a figure that rises to 5.5% in Moscow, which is closer to the EU average of 6.1%. These investments come as a growing number of industrialized nations look toward phasing out gas combustion vehicles as a means of reducing greenhouse gas emissions.

While Russia’s EV market has grown significantly in recent years, it remains behind European countries. The EU is also looking at a total ban on fuel-powered car sales by 2035 in order to meet its new strategic climate goals of halving its carbon emissions by 2030 and achieving carbon neutrality by 2050.

In May, President Vladimir Putin set targets for Russia’s greenhouse gas emissions to fall below those of the EU by 2050. Russia will be presenting its plans to do so at the crucial COP26 climate summit taking place in Glasgow in six weeks’ time, where attending nations will aim to illustrate plans to satisfy the global Paris Climate Accord.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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