From Russia With Yo: A Billionaire's Green Hybrid Car
After decades of indifferently built, communist-era cars like the Skoda, Moskvitsch and Lada, the Russian auto industry has nowhere to go but up. Set adrift from state control and hit by an economic downturn, the industry has been floundering, and the domestic market is flooded with import brands produced in joint ventures.
But the potential for a strong local industry is there, as the country emerges from a recession that cut car sales (which had earlier been on a strong upward trajectory) 60 percent in the first 11 months of 2009. Now the Russian government has injected $1.1 billion into the auto sector, with programs, including a western-style "Cash for Clunkers" effort, that are trying to jump-start sales.
There are some signs of recovery. Skoda, now owned by Volkswagen, has plans to double production (to 1.5 million) in five years. Some companies, including giant AvtoVAZ, have restarted production after a hiatus.
Enter the entrepreneur
It's possible a self-made Russian entrepreneur with strong U.S. ties, green inclinations and a broad portfolio of interests can help rejuvenate the country's auto sector. He's not looking for state handouts or a captive market -- he wants to build a competitive car.
Mikhail D. Prokhorov, the Russian billionaire who owns the New Jersey Nets, is now launching E-Auto, a hybrid car company that will produce the so-called "Yo." As shown in small sedan form, it is a hybrid that has two electric motors to propel the car and a small gas engine (also capable of running on natural gas) that generates electricity. The car also has a bank of capacitors to hold short-term charges, a technology also used for start-stop micro-hybrids in Europe.
This is one of the few green car introductions to merit a mention in Sports Illustrated. The Yo, to be sold at least initially only in the Russian market, will cost $14,500 when it debuts in mid-2012. The Yo also boasts estimated 67 mpg fuel economy and a range of 680 miles. Top speed is said to be 80 mph. The sedan will eventually be part of a broader E-Auto portfolio that includes a sports car and a small truck. Annual volume is a hoped-for 10,000 a year, but such goals often fall short.
What $200M buys in the Russian car market
Prokhorov is the second richest man in Russia, and the 39th richest in the world, so he can probably afford the $200 million he's putting into the company's launch.
Ford, General Motors and Toyota are players in the Russian car market, and have built plants there. Cars, especially those from out of town, are huge status symbols in Russia. So Prokhorov's new company could be a way to restore pride in Russian engineering that suffered in the Soviet era.
Prokhorov said as much at the launch of the car last week: "For the time being, Russia lacks value-added goods," he said."That is why cars are very important, to give the world a value-added product made in Russia."
A steep challenge for Russian pride
Russian pride is at stake. An executive at GAZ (maker of the Volga) told reporters not to forget "that Russia was the first country to launch a man into space, not the second. That's the spirit of our company." Of course, GAZ has also had to lay off 7,000 workers. No Russian car has ever been much of a seller outside what could then have been described as captive markets. There are certainly a lot of them in Cuba, parked alongside the aging American land yachts from the Batista era.
Prokhorov seems poised to pour quite a lot of attention and money into E-Auto, but launching a green car company to restore national pride is probably a fun diversion from Siberian mining and keeping track of the Nets. Even more of a challenge would be gearing up E-Auto to produce cars for export -- not on the horizon now. If E-Auto stops putting a smile on Prokhorov's face, he may find another sports team to buy.
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Photo: E-Auto