Russia’s struggling war economy might be what finally drives Moscow to the negotiating table

Published

3 months ago

May 22, 2025

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Russian President Vladimir Putin tours an exhibition at the Central Museum of the Great Patriotic War on Poklonnaya Gora in Moscow, Russia, April 30, 2025.

Alexander Kazakov | Via Reuters

Russia has shown little appetite for peace negotiations with Ukraine, despite Moscow making a show of what war experts described as “performative ceasefires,” and a number of attempts by U.S. President Donald Trump to persuade Russian leader Vladimir Putin to talk to Kyiv.

In fact, Moscow is widely believed to be planning a new summer offensive in Ukraine to consolidate territorial gains in the southern and eastern parts of the country, that its forces partially occupy. If successful, the offensive could give Russia more leverage in any future talks.

While Russia seems reluctant to pursue peace now, increasing economic and military pressures at home — ranging from supplies of military hardware and recruitment of soldiers, to sanctions on revenue-generating exports like oil — could be the factors that eventually drive Moscow to the negotiating table.

“Russia will seek to intensify offensive operations to build pressure during negotiations, but the pressure cannot be sustained indefinitely,” Jack Watling, senior research fellow for Land Warfare at the Royal United Services Institute (RUSI) in London, said in analysis Tuesday.

Russian stockpiles of military equipment left over from the Soviet era, including tanks, artillery and infantry fighting vehicles, will be running out between now and mid-fall, Watling said, meaning that Russia’s ability to replace losses will be entirely dependent on what it can produce from scratch.

“At the same time, while Russia can fight another two campaign seasons with its current approach to recruitment, further offensive operations into 2026 will likely require further forced mobilisation, which is both politically and economically challenging,” Watling surmised.

CNBC has contacted the Kremlin for a response to the comments and is awaiting a reply.

Economy slowing

In the meantime, dark clouds are gathering on the horizon when it comes to Russia’s war-focused economy, which has labored under the weight of international sanctions as well as homegrown pressures, also largely resulting from war, such as rampant inflation and high food and production costs that even Putin described as “alarming.”

Russia’s central bank (CBR) has stood the course of keeping interest rates high (at 21%) in a bid to lower the rate of inflation, which stood at 10.2% in April. The CBR said in May that a disinflationary process is underway but that “a prolonged period of tight monetary policy” is still required for inflation to return to its target of 4% in 2026. In the meantime, a marked slowdown in the Russian economy has surprised some economists.

“The sharp slowdown in Russian gross domestic product growth from 4.5% year-on-year in the fourth quarter, to 1.4% in the first quarter is consistent with a sharp fall in output and suggests that the economy may be heading for a much harder landing than we had expected,” Liam Peach, senior emerging markets economist at Capital Economics commented last week.

“Such a sharp drop in GDP growth has surprised us, although we had expected a slowdown to take hold this year,” he noted, adding that “a technical recession is possible over the first half of the year and GDP growth over 2025 as a whole could come in significantly below our current forecast of 2.5%.”

In this pool photograph distributed by Russian state agency Sputnik, Russia’s President Vladimir Putin visits Uralvagonzavod, the country’s main tank factory in the Urals, in Nizhny Tagil, on Feb. 15, 2024.

Ramil Sitdikov | Afp | Getty Images

The growth that remains in the Russian economy is concentrated in manufacturing, specifically the defense sector and related industries, and is being fueled by state spending, according to Alexander Kolyandr, senior fellow at the Center for European Policy Analysis.

“After three years of militarizing the country, Russia’s economy is cooling,” he said in online analysis for CEPA, noting that the slowdown in inflation, less borrowing by companies and consumers, declining imports, industrial output and consumer spending all pointed to the slowdown continuing.

That’s not disputed by Russian officials, with the Economic Development Ministry predicting that economic growth will slow from 4.3% in 2024 to 2.5% this year.

“The economy is not demobilizing; it is just running out of steam. That said, a drop can easily become a dive. Bad decisions by policymakers, a further dip in oil prices, or carelessness with inflation, and Russia could find itself in trouble,” Kolyandr said.

Sanctions and oil price bite

What’s particularly starting to hurt Russia are factors beyond its control, including tighter sanctions on Russia’s “shadow fleet” (vessels illicitly transporting oil in a bid to evade sanctions enacted following the 2022 invasion of Ukraine) and a decline in oil prices as a result of Trump’s global tariffs policy that is hitting demand.

On Thursday, benchmark Brent futures with a July expiry stood at $64.94 a barrel while frontmonth July U.S. West Texas Intermediate (WTI) crude was at $61.65. The last spot price of a barrel of Urals crude oil, Russia’s benchmark, was at $59.97, according to LSEG data.

At the start of 2025, Brent was trading at $74.64 per barrel, while WTI and Urals crude were trading at $75.13 and $70.04, respectively.

Russia’s finance ministry said in April that it expects 24% lower revenues from oil and gas this year, compared to earlier estimates, and lowered its oil price forecast from $69.7 to $56 per barrel. The ministry also raised the 2025 budget deficit estimate to 1.7% of GDP, from a previous forecast of 0.5%.

FILE PHOTO: Crude oil tanker Nevskiy Prospect, owned by Russia’s leading tanker group Sovcomflot, transits the Bosphorus in Istanbul, Turkey September 6, 2020.

Yoruk Isik | Reuters

A lower oil price will “severely limit Russian revenue while its reserves are becoming depleted,” RUSI’s analyst Watling remarked.

“More aggressive enforcement against Russia’s shadow fleet and the continuation of Ukraine’s deep strike campaign could reduce the liquid capital that has so far allowed Russia to steadily increase defence production and offer massive bonuses for volunteers joining the military,” he said.

If Western allies can maintain and strengthen efforts to degrade Russia’s economy, and Ukraine’s forces “deny Russia from reaching the borders of Donetsk [in eastern Ukraine] between now and Christmas,” then “Moscow will face hard choices about the costs it is prepared to incur for continuing the war.”

“Under such conditions the Russians may move from Potemkin negotiations to actually negotiating,” Watling said.

Environment

The oddly personal truth about ADAS: self-driving cars are like running shoes

Published

8 hours ago

August 8, 2025

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The oddly personal truth about ADAS: self-driving cars are like running shoes

There you are, motoring along in your Volvo XC90 PHEV with the Pilot Assist engaged alongside a big 18-wheeler at a comfortable 70 mph cruise when the interstate starts to slowly sweep left. From the drivers’ seat, that semi on your right looks awfully close. As the steering wheel turns itself in your hand, you start to wonder if that truck’s a bit too close. The car isn’t doing anything wrong, but it’s too close for your comfort and you give the wheel a little nudge to hug the inside of the lane just a bit more.

These deeply personal preferences are tough to quantify, and highlight a simple fact about Advanced Driver Assistance Systems (ADAS) that the industry at-large hasn’t yet to come to terms with: when it comes to self-driving cars, one size does not fit all.

The Volvo experience I outlined above was very real, happening just as the wife and I were arguing about the relative merits of our very different choice in running shoes. She prefers the supportive, cushion-y ride of the HOKA Clifton 9s, which I’ve become convinced are The Devil™, preferring instead the zero-lift, no-cushion feel of my Xero Prio runners. The intervention with the Volvo interrupted that particular argument and started another. Namely, the one about why I had chosen that moment to “interfere” with the Pilot Assist.

“It was too close to that truck,” I explained. “Freaked me out.”

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“That’s how I feel in the Honda,” she said. “I’m always afraid that it’s going to try and put me into oncoming traffic.”

That’s when the idea for this post came to me. Because, as a car brand, it’s really not possible to just say that your car has ADAS or doesn’t have ADAS in a binary sense. That’s because these systems are not just proprietary to a given brand, they can vary from vehicle-to-vehicle within that brand, and each one can have distinct lane centering behavior, steering feel, lane change aggressiveness, braking distances, timing for its hand-off warnings, and probably a bunch of other stuff that I haven’t even thought of depending on what kind of cameras, sensors, and software the specific vehicle you are in is equipped with.

It’s a bit of a mess, in other words.

Opinion: Honda Sensing gets it right

I first experienced Honda’s ADAS in 2014, driving a then-new CR-V between Chicago and Bay Harbor, Michigan for an Acura press drive. Even in its early generations, I was impressed with the way it handled stop-and-go traffic, the way it guided you through turns, but didn’t do the turning for you, and the speed and intensity it used in braking very much mirrored my own.

Last month, I had a chance to test out the 2025 Honda Civic Sport Touring Hybrid for a week on Cape Cod. I picked the car up at PreFlight Parking outside Boston Logan, jammed it with luggage, and immediately hit heavy traffic, where the Honda Sensing Low-Speed Follow function took me right back to 2014, ratatouille-style, when my experience in that car had led me to believe that self-driving cars were right around the corner.

In the decade-plus since experiencing that first autonomous Acura, I’ve had the chance to experience Ford BlueCruise, Tesla Autopilot and FSD, and Mercedes-Benz DRIVE PILOT. And all, interestingly enough, in and around the Circuit of the Americas in Austin at one time or another over my three years of hosting Electrify Expo events there.

Each different OEMs’ system had its strengths and quirks. I remember Mercedes DRIVE PILOT as impressively precise, even clinical. The Ford system faded into memory. I couldn’t tell you anything about it, which is probably high praise. The Tesla systems, though, stood out — but for all the wrong reasons. Lane changes came too quickly, it accelerated too late, and too aggressively, and I often found myself bracing for collisions that (in fairness) never came.

More than once in those years I’ve wondered if maybe I’d just got it wrong back in 2014. That the tech was so new, and I had been so wow’ed by it initially, that I had got swept up in the hype of self-driving cars … but that drive in my wife’s XC90, back-to-back as it was with the Civic Hybrid, showed me that wasn’t it. Instead, I just didn’t like the way those other cars drove. Just like I don’t like the way HOKAs feel. And, just like my wife isn’t wrong for liking her gross marshmallow shoes (probably), I’m not wrong for preferring a more restrained digital co-pilot.

It’s a matter of fit, not fact — and that’s going to be a tough sell.

Everyone but me is wrong

[embedded content]

Classic Carlin bit.

As the great George Carlin once asked, “Have you ever noticed that anyone who is driving slower than you is an idiot, and anyone driving faster than you is a maniac?”

ADAS systems live squarely in that same subjective space occupied by other drivers. If the bots brake too hard, steer too sharply, or get too close to the car head before changing lanes, they might not be technically doing anything wrong, but they’re maniacs – and right now, there’s no real way to know how one car’s ADAS is going to behave until you’ve spent some significant time behind the wheel. Like, “Uh-oh. I bought a thing and I hate it,” amounts of time.

That’s a problem for both buyers and sellers (to say nothing of manufacturers and software developers), because why would you risk demonstrating a system that might scare someone? How do you sell “confidence” and “convenience” when what feels confident and convenient to one driver feels reckless to another, and milquetoast to a third?

Lucky for you guys, I have a solution.

Jojo’s ADAS scorecard *

System	Lane centering bias	Lane change distance (car lengths)	Follow distance (default)	Braking force (max Gs)	Hands-off time allowed	Overall “feel”
Ford BlueCruise	Centered	~3.5	Moderate	0.30 G	Medium	Stable
Honda Sensing	Slight left bias	~2.5	Safe	0.35 G	Short	Balanced
Mercedes-Benz DRIVE PILOT	Centered	~3.5	Moderate	0.40 G	Long	Confident
Tesla Autopilot	Centered	~1.5	Close	0.45 G	Long (varies)	Aggressive
Volvo Pilot Assist	Slight right bias	~3.0	Moderate	0.30 G	Moderate	Cautious

NOTE: THESE ARE NOT REAL VALUES

That asterisk (*) is there because these are completely made up, imaginary values. They’re simply there to illustrate one way for manufacturers and dealers to share objective, quantifiable information about how their different ADAS systems behave. If it’s done right, it might help a car shopper get a better feel for how their next car might drive, and prevent them from spending their hard-earned cash on a car that drives like an idiot. Or a maniac.

That’s my take, anyway – what’s yours? Head down to the comments and let us know what values you’d like to see represented on an ADAS scorecard, and how much you’d be willing to base your next car buying decision on how it drives.

As for me, my X handle might be VolvoJo, but if I’m shopping for a car that’s going to drive me instead of the other way around, I might have to see if “HondaJo” is available.

Original content from Electrek.

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Fresh TSLA lawsuits, V2X options, and the USAF is blowing up Cybertrucks

Published

10 hours ago

August 7, 2025

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Fresh TSLA lawsuits, V2X options, and the USAF is blowing up Cybertrucks

Elon wants the US military to start buying Tesla Cybertrucks – and now they are! The Air Force has ordered two Cybertruck testers for target practice to determine how easy they are to blow up, while Jo makes up a whole new conspiracy theory on today’s explosive episode of Quick Charge!

Today’s episode is brought to you by retrospec—makers of sleek, powerful e-bikes and outdoor gear built for everyday adventure. Electrek listeners can get 10% off their next ride until August 14 with the exclusive code ELECTREK10 only at retrospec.com.

An it doesn’t stop there. We’ve also got exciting new home battery backup and V2X options for Tesla owners, and one Texas EV driver that decided to conquer the Texas floodwaters by harnessing the awesome combined powers of electrons and stupidity (it’s pretty awesome).

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Tesla’s Dojo supercomputer looks dead as more execs leave for competing startup

Published

10 hours ago

August 7, 2025

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Tesla's Dojo supercomputer looks dead as more execs leave for competing startup

Tesla’s Dojo supercomputer project is reportedly over. Bloomberg reports that CEO Elon Musk is killing the project after a mass exodus of talent from the Dojo team to a competing startup.

Dojo was the name of Tesla’s in-house AI chip development to create supercomputers to train its AI models for self-driving.

Tesla hired a bunch of top chip architects and tried to develop better AI accelerator chips to rely less on companies like NVIDIA, AMD, and others.

It has been running into delays for years.

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We previously reported on significant setbacks. In 2018, Jim Keller, the famed chip architect who was first hired to lead Tesla’s chip-making effort, left the company.

Ganesh Venkataramanan succeeded him, but he left Tesla in 2023.

For the last few years, Peter Bannon, who worked with Keller for years, has been leading Tesla’s chip-making programs, but he is now reportedly also leaving the automaker.

Bloomberg reports that Musk has “ordered the effort to be shut down.”:

Peter Bannon, who was heading up Dojo, is leaving and Chief Executive Officer Elon Musk has ordered the effort to be shut down, according to the people, who asked not to be identified discussing internal matters. The team has lost about 20 workers recently to newly formed DensityAI, and remaining Dojo workers are being reassigned to other data center and compute projects within Tesla, the people said.

DensityAI is a new startup currently in stealth mode, founded by several former Tesla employees, including Venkataramanan.

It reportedly plans to build chips for AI data centers and robots, much like the Dojo program.

The company recently hired 20 former Tesla employees who worked on Dojo.

While the program appeared to be lagging behind for years as Tesla increasingly bought more compute power from NVIDIA, Musk has been claiming progress.

The CEO said in June:

Tesla Dojo AI training computer making progress. We start bringing Dojo 2 online later this year. It takes three major iterations for a new technology to be great. Dojo 2 is good, but Dojo 3 will be great.

During Tesla’s quarterly conference call in late July, the CEO claimed that Dojo 2 will be “operating at scale sometime next year.”

Electrek’s Take

It’s unclear whether the report is accurate or if it’s an extrapolation from the talent exodus to Elon killing Dojo, or if Elon was lying just a few weeks ago.

Alternatively, this development may be so recent that Elon went from being confident in Dojo a few weeks ago to disbanding the team working on it now.

Either way, I think it’s clear that the project has been lagging, and Tesla has been extremely dependent on chip suppliers rather than making its own.

I think Dojo being likely dead is not a big loss for Tesla.

When it comes to chip making, developing its own inference compute for onboard “AI computers” was always the more important project.

TSMC is set to produce Tesla’s new AI5 chip, which is coming soon, and we have recently learned that Samsung will be manufacturing its AI6 chip.

I think the bigger concern from this report is that it’s the latest example of an ongoing exodus of talent at Tesla.

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