Original Material
Italian design but no engine. Sergey Aslanian explains why Russia’s brand-new Atom electric car is a vivid case of corruption
Italian design but no engine. Sergey Aslanian explains why Russia’s brand-new Atom electric car is a vivid case of corruption
11 October 2023Sergey Aslanian
car expert
Late in July 2023, Russian automaker KAMAZ announced the start of pre-orders for its new electric car, the Atom. This week, the manufacturer reported receiving 36,000 applications. Atom's mass production is scheduled for 2025. Pre-orders for the vehicle came at a price of around $70, but the final market price of the electric car is still unknown. Radio host and automotive journalist Sergei Aslanyan believes that the entire project exists for the sole purpose of embezzling public funds.
Is corruption good or bad? In Russia, even the obvious requires clarification and prudence. MP, lawyer, and politician Irina Yarovaya stated in 2018:
“Fighting corruption can destroy the state. Ukraine also fought corruption, and you see what happened there. Under the pretext of fighting corruption, the entire system of state power was destroyed. No one noticed it when the government and the state were crumbling; therefore, the fight against corruption is harmful to the state. I believe we have no need for it. In Russia, everything is fine in terms of corruption.”
Indeed, corruption in Russia is a thing of beauty. And every case of corruption only strengthens Russia.
The Atom electric car project grew out of KAMAZ's Kama-1 project. Kama was built on the taxpayers’ dime despite the absence of any popular demand. Nobody asked for a flimsy electric car; the domestic market doesn't need one. But KAMAZ was in the mood to throw money around. And the state granted its permission because what could strengthen the country better than a corrupt project?
KAMAZ was in the mood to throw money around. And the state granted its permission
Kama received public funding under the Federal Targeted Program “R&D in Priority Development Areas of Russia’s Scientific and Technological Complex for 2014-2020.” The costs amounted to $2.1 million, of which $1.5 million was a Ministry of Education grant and $600,000 million was invested by KAMAZ. Once the money was spent, it turned out that nobody in Russia needed the Kama-1, and KAMAZ announced plans to build a plant in Hungary and start production there. However, no one heard any endorsement from the host country.
KAMAZ enjoyed “strengthening the state” so much that it moved on from the unwanted Kama-1 to the project of an electric car that was just as unwanted: the Atom. And that’s when a transformation occurred. Atom went private. Its main investors were KAMAZ CEO Sergei Kogogin and entrepreneur Ruben Vardanyan. Kogogin had a small chunk of his salary left – just enough for a car and a joint stock company with an authorized capital of $7.2 million. The private Atom project was based on Kama-1, which had cost the state $1.2 million.
Atom electric car prototype
https://order.atom.auto
Kogogin got the hint that corruption is useful but fraud is still considered a crime: Part 3 of Article 159 of Russia’s Criminal Code, punishable by a prison sentence of up to six years. He immediately took a backseat and declared Atom was not his. But he quickly relaxed, remembering the old Soviet practice of sending peasants to the Gulag for stealing three ears of wheat but rewarding those who’d stolen a car of wheat. In his case, he was more likely to get the figurative title of “Hero of Socialist Labor” than six years behind bars, so he took the risk of reclaiming Atom for himself.
The fascinating thing about Project Atom is that we’re yet to see anything except bold promises. The car has no electric motor yet. There are no batteries yet. But the announced power reserve is 500 kilometers, the design is Italian, and the app used to control the car is presumably hack-proof.
The only question is: where can we steal more money? I mean, whose money can we use to strengthen the state just a little bit more? And then Rosatom comes to the aid of the private venture, which had absorbed $1.2 million of taxpayers’ money, and willingly buys 23% of Atom's shares. Rosatom claimed the deal was a bargain and presented it to the public as “a relatively small investment in a promising project.” Now Kogogin and Vardanian aren’t desperate for money anymore: they have enough for their personal startup to carry on, even if its only true purpose is to put public funds to use.
How small was the investment? Almost $60 million. Taken straight from the federal budget. If $60 million bought a modest stake of 23%, then Kogogin and Vardanyan put together are worth nearly $260 million. And $60 billion is peanuts. Why should we be stingy with public funds for a private startup if it can make Russia stronger?