Indonesia Accelerates EV Adoption To Reduce Fuel Subsidy Budget
To reduce the increase in the fuel subsidy budget, accelerating the adoption of EV in Indonesia is said to be a concrete action. To that end, the Indonesian government is formulating various policies regarding the provision of incentives for two-wheeled and four-wheeled EV vehicles. The technical team consisting of cross-ministerial and institutional is asked to formulate better policies than other countries that have previously implemented policies to limit the sale of fossil fuel vehicles.
On September 15, President Jokowi issued Presidential Instruction (Inpres) Number 7 of 2022, instructing the central and regional governments to take the necessary steps to accelerate the implementation of using electric vehicles as operational service vehicles, individual service vehicles of central government agencies and local governments, through the scheme of purchasing, leasing, and/or converting fueled motor vehicles into battery-based EVs.
On September 12, Minister of State-Owned Enterprises Erick Thohir circulated a letter to 84 executives of SOEs, asking for support in accelerating the development of the electric vehicle ecosystem in Indonesia, both four and two wheels. This letter explains that SOE has a role in implementing the Government’s commitment to achieve the energy mix target of 23% new and renewable energy by 2025, as well as Net Zero Emission by 2060. In general, SOEs are asked to allocate resources within the company, such as providing a budget to support the acceleration of the Battery based EV (BEV) program. SOEs were asked to increase the use of various types of BEVs within the corporate group for official vehicles for directors and company leaders, two-wheeled and four-wheeled company operational vehicles, and vehicle ownership programs for employees. Specifically for PLN and Pertamina, both are asked to synergize with other related SOEs to prepare supporting infrastructure, charging stations and battery swap stations, especially in sectors managed by SOEs, including toll road rest areas, airports, ports, train stations, tourism area, and gas stations. Furthermore, SOEs in the banking sector were also asked to provide support for facilitating BEV financing for both two-wheeled and four-wheeled vehicles.
Deputy Chairman of the Association of Indonesian Regency Governments, M Nur Arifin, explained the challenges of the EV program in the regional side, whereas electric cars may not be suitable for the rural and hilly terrains and the limited availability of battery charging stations. The association asked for supporting infrastructure such as certified motorcycle repair shops for conversion to electric vehicles, in addition to tax incentives to increase public interest.
Electric motorcycle prices in Indonesia range from IDR 11 to 38 million.
Meanwhile the latest electric car prices in Indonesia are as follows:
Wuling Air EV Standard Range, IDR 238 million
Wuling Air EV Long Range, IDR 295 million
Nissan Leaf Electric 2021, IDR 649 million
Hyundai Ioniq Electric, Rp 682 million-Rp 723 million
Nissan Leaf One Tone EV 2022, IDR 728 million
Nissan Leaf Two Tone EV 2022, IDR 730 million
Hyundai Kona Electric, IDR 742 million
MINI Electric, IDR 945 million-Rp 955 million
Lexus UX300e, IDR 1.245 billion
Tesla Model 3, IDR 1.5 billion
Tesla Model Y, IDR 2 billion
The Association of Indonesian Automotive Industries (Gaikindo) data shows that the Indonesian automotive industry currently has a production capacity of 2.4 million units per year, of which only 1.12 million units have been utilized in 2021 or still 47 percent of the total capacity. Of this number, only 13,000 units of electric cars are reported from two first EV manufacturers in the country, Hyundai and Wuling.
Chairman I Gaikindo, Jongkie Sugiarto, said that the policy taken by the Ministry of SOEs would certainly be a positive step to accelerate the population of electric cars in Indonesia, considering the people’s per capita income of USD 4,300, most Indonesians are only able to afford cars below IDR 300 million.
PT Toyota Motor Manufacturing Indonesia believes that hybrid electric vehicles are a solution to encourage the adaptation of electric vehicles in Indonesia as they are more affordable, fuel-saving, and the infrastructure is relatively cheaper. In the last three years, Toyota’s electrified vehicle sales have grown to approximately 1000 units on average every year. Currently, more than 6,200 hybrid cars have been marketed in Indonesia since the Prius Hybrid was first launched in 2009.
Business Innovation and Sales & Marketing Director of PT Honda Prospect Motor, Yusak Billy emphasized that Honda develops products that are in line with the Indonesian government’s road map, environmentally friendly vehicles towards full electrification.
Hyundai continues to spur the production of its electric cars in Indonesia. Their Head of Group Production, I Wayan Bagiarta, said that the Hyundai factory in Cikarang, West Java, is intended for the production of conventional cars and electric cars. Currently, the installed production capacity for Hyundai’s electric cars is 12,000 units per year, out of a total production capacity of 150,000 units per year. Public interest in Hyundai’s electric cars is fairly good. Purchase orders for Hyundai Ioniq 5 has continued to increase to 3,000 units since its first launch in March 2022. With a monthly production capacity of 300-400 units, consumers are forced to wait 6-8 months.
PT Sokonindo Automobile as the agent holding the DFSK brand said it would build a factory in Cikande, West Java, in the near future to meet the demand for electric cars in Indonesia. Currently, the DFSK electric car is still a CBU imported directly from China. The company did not specify the timeline, production volume and investment value. DFSK focuses on electric cars in the light commercial vehicle segment in Indonesia. Its minibus model is priced at IDR 582.1 million and the blind van model is priced at IDR 484 million.
The development of the electric car ecosystem in Indonesia is still lagging behind compared to Thailand, both in terms of population and sales volume. Total sales of battery electric vehicles (BEV) in Thailand in the first semester of 2022 have penetrated 3,097 units with 29 car models. Indonesia recorded sales of 2,039 combined hybrid HEV, PHEV, and BEV units during January – July 2022, stagnant compared to performance in the same period last year of 2,027 units, growing only 0.59%. Thailand sells out many policies that make it easier to own electric cars, plus more infrastructure development. With a smaller area, Thailand based on data from the Electric Vehicle Association Thailand (EVAT) already has 2,459 charging stations, spread over 855 locations. Indonesia is claimed to have only 267 charging stations spread over 195 locations. In fact, citing Frost & Sullivan’s research on the Asean electric car market, the issue of charging reliability is a fundamental thing that makes consumers reluctant to switch to electric products. The Thai government wants electric vehicle production to reach about 700,000 by 2030, or 30% of total auto manufacturing. Thailand is a regional auto production and export base for the world’s leading carmakers, including Toyota and Honda. Both have recently offered incentives including tax breaks and subsidies to attract EV makers and stimulate demand.
