Opportunities & Challenges for Building EV Industry in Indonesia

EV Industry

Pursuing the future of the electric vehicle industry in Indonesia by recognizing the opportunities and challenges it presents.

What is Electric Vehicle (EV) Technology?

Electric vehicle or EV technology usually stored in a rechargeable battery, to power an electric motor, which turns the wheels on the road.

The growing popularity of EV technology around the world, including in Indonesia, is caused by the technology’s ability to tackle the fossil-fuel-related issue. Fossil fuel causes detrimental effects on the environment and it is also a depleting resource. By estimation, fossil fuel will be depleted by 2060, which pushes everyone to look for new resources in the form of renewable energy sources. Electric vehicle or EV answer the mentioned issue, as they offer friendlier and cleaner energy.

The EV Industry in Indonesia

The Indonesian Government has designed ambitious plans where the aims is for domestic electric vehicles to be the nation’s product and export base for motor vehicles.

The EV industry in Indonesia is still working its way up. In 2019, 15,000 EVs were sold out. The Indonesian Government plans to produce more – aiming 400,000 EVs by 2025 and 1,000,000 EVs by 2035. Jakarta and Bali, as the country’s capital and international tourist destination, will be the model cities for EV implementation.

Opportunities for Building the EV Industry in Indonesia

EV players around the world are paying closer attention to Indonesia because this country offer numerous opportunities for building and growing EV industry. The opportunities enlisted are:

  1. Favorability for personal transportation ownership
    Flexibility and convenience are two of the main reasons behind the demand of personal cars in Indonesia. The EV technology itself is a symbol of better economic status, and it attracts this market.
  2. Increasing purchasing power
    Increasing purchasing power from the middle to affluent classes in Indonesia leads to higher purchases of personal vehicles. This is an opportunity for every EV industry player to place their product in the Indonesian market.
  3. Competitive production cost
    Indonesia is known for its competitive production cost compared to other countries in the same region. Competitive production cost is equivalent to higher profit.
  4. Support from the government
    Indonesia’s Government fully supports the development of EV technology and the EV industry in this country. Several regulations have been issued to support this matter. One of which is the Presidential Decree No. 55 of the Year 2019 on Acceleration on Battery Electric Vehicle Program for Road Transportation, which outlines the government’s plans for promoting and accelerating battery electric vehicle programs in this country.
  5. The abundance source of raw materials for Lithium-ion batteries
    Indonesia’s abundance of natural resources, with its large deposits of Lithium-ion batteries raw material including nickel and cobalt, helps to fuel the growth of the electric vehicle battery market in this country.

The Challenge of Implementing the EV Industry

The implementation of EV technology and the EV industry in Indonesia comes with its challenges, including:

  1. Price
    Products from EV technology and the EV industry are still considered expensive products, both from the starting cost and the maintenance cost. The government needs to apply subsidized tax and incentive policies for future EV users.
  2. EV industry standardization
    Lack of standardization presents another challenge within the EV industry. There are various EV battery types and each requires a different treatment and charger. The lack of standardization leads to high maintenance costs.
  3. Environmental concern
    The extraction process of raw material required for EV battery production has caused some environmental concerns. In addition lies the possibility of adding waste to the landfill from the used EV battery.
  4. Pandemic
    The ongoing pandemic add to the challenge of the EV industry, as it has challenged the market sustainability.
  5. Increasing cost
    The demand for EV units in Indonesia and all around the world keeps rising every year. This leads to an increasing cost of raw material needed for the EV battery production.

Indonesia is a potential market for EV technology and the EV industry to grow in the future. Strong support from the government, including clear policies and implementation, is highly needed to boost electric vehicle development in this country.

Share to your social media: