Indonesia’s Battery Electric Vehicles
The outlook and opportunities in Indonesia.
The electric vehicles (EVs) industry is a newly developed industry in Indonesia. Highly driven by the growing concerns over the environment and climate crisis, the industry has set to grow in the future years. The Government set electric vehicles as a priority for Indonesian manufacturing. The President’s vision on making Indonesia 4.0 has also accelerated the adoption of EVs, with an ambitious target of locally produced 2.1 million e-motorcycle and 400,000 e-cars to be sold by 2025.
A Glance at the Industry in Indonesia
Back in 2019, the President of Indonesia signed Presidential Regulation №55 of 2019 on the Acceleration of Battery Electric Vehicles Program for Road Transportation, which has come to take effect on 12 August 2019. Indonesian Government is providing incentives for manufacturers to boost battery electric vehicles (BEV) development.
The government is targeting EVs to take on 20% of the vehicle production by 2025. These EVs include hybrids, plug-in hybrids, and battery-based EV cars. The domestic production of EVs is expected to start by 2021 or 2022.
According to the IESR report, there are several EVs that are already operating by 2019. The explanation will be shown in the table below:
Supporting Natural Resources for Battery Production
The Government stated that Indonesia has abundant natural resources needed to enable the country to become the leader of EV manufacturing in ASEAN. Indonesia has been the world’s biggest producer and reserves of nickel ore, which is a key component of EV batteries. The battery for EVs significantly contributed to its manufacturing cost (25% to 40%). Sufficient raw materials in Indonesia can be a major competitive advantage for the country. However, a carefully designed and planned blueprint for the industry must be established to ensure the optimization of its utilization.
Government’s Effort in Ensuring Natural Sources Availability: Lithium and Nickel Ore
The Government established an export ban law for nickel ore. Indonesia is also developing a lithium battery manufacturing plant in Central Sulawesi. With a total value of investment IDR 51 trillion, the plant will utilize the abundant nickel resources in the area. The government will establish a state-owned battery holding company to develop an end-to-end domestic supply chain for EV batteries. The target is to produce 8 to 10-gigawatt hours of batteries per year for the next four months (Nikkei Asia, 2020) .
Market Challenges
Despite the competitive advantages that Indonesia has, the development of EVs is not without challenges. The targeted adoption of EVs in 2025 faces several market challenges. Indonesian are concerned about technology and pricing, especially during this economic crisis. A research shows that Indonesian would usually think twice on buying a car, moreover for a car that they are not familiar with, with a high price point (The Jakarta Post, 2020).
The lack of a charging station is another challenge. Public charging infrastructure must be well-developed to support EV adoption. To reach the targeted adoption of EVs, the government needs to install 31,000 commercial charging stations with a total of USD 3,7 billion investment, according to PLN’s station development road map. The charging station will mostly be located in Jakarta, but is targeted to be installed in cities as far as Makassar. Moreover, the charging station must be standardized in each location, so there would be no problem with the compatibility. Currently, Indonesia only has 62 EV charging stations, from the targeted 180 stations this year (Ministry of Energy and Mineral Resources, 2020).
Prominent Players and Foreign Interest
Currently, there are 15 licensed two- and three-wheel EVs producers in Indonesia. These producers have a total production capacity of 877,000 units per year. The brands are Gesit, Selis, MIGO, Viar and many others. Indonesia currently has one local producer of four-wheel or more EVs that produces electric buses with a production capacity of 1,200 units in a year, PT. Mobil Anak Bangsa (MAB). PT. MAB was founded in 2017 by Dr. Moeldoko, in support of the Government’s EVs acceleration program. In mid-2020, the ride-hailing giant Grab along with Hyundai introduced GrabCar Elektrik services in Jakarta. The service consists of 50 Hyundai Ioniq EV cars, and 500 cars are targeted to be deployed by the end of the year.
Several big international names show interest in Indonesia’s EVs market and planning on building EVs factories in Indonesia. Currently, there are already several EVs in Indonesia. Mitsubishi Outlander is one of the pioneered electric vehicles that have been available to the market since July 2019. Outlander is a plug-in hybrid electric vehicle (PHEV), a total of 53 units have been sold per 2020. A luxury brand, BMW is also planning to bring their electric vehicle, iX3 to Indonesia.
According to South Korea media, two major Korean firms, Hyundai Motor Group and LG Chemical are considering setting up their first joint venture EV battery plants in Indonesia. The plant will be built on a 100-hectare site in Batam and involve an investment of IDR 70 trillion. However, nothing has been signed yet. The leading global player, Tesla is also in talks on developing a battery electric vehicle manufacturing plant in Indonesia.
BRIGHT Indonesia as a Partner to Help Your Company Join Indonesia Electric Vehicles Industry
Overall, the EVs industry in Indonesia is vastly growing. Especially with the support from the Indonesian Government in accelerating the adoption of EVs in the country to achieve the clean energy target, from law and regulations to incentives for manufacturers. Thus, there are many opportunities for global companies that want to support the adoption of EVs in Indonesia. However, one thing to note in entering Indonesia’s electric vehicles industry is important to have the right local partner.
BRIGHT Indonesia is a perfect partner for your company. BRIGHT Indonesia will assist you on the ground, including virtual assistant during the mission, logistic arrangement, and communication of every detail. It can make your company focus on developing partnership cooperation without thinking further about the hassle during the business trip.
BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, and Business Registration and Establishment services that can help you in expanding and developing your business, register and establish your products and company, as well as obtain the work and stay permit in Indonesia ((expatriates utilization plan (RPTKA), expatriates utilization permit (IMTA), limited stay permit (KITAS)) easier.
BRIGHT Indonesia always strives to give excellent services designed only to fulfill your company’s needs with experiences in assisting multiple global clients in entering Indonesia and Southeast Asia Market. Having successfully collaborated with several clients, BRIGHT Indonesia has extraordinary experience with global companies. These collaborations are proof of our unrivaled service.
For more information, email info@brightindonesia.net.
