Ambitious targets for electric vehicles in Indonesia for the future.
In a recent report from the climate works center in collaboration with Monash University in Melbourne, a detailed report mentioned that Indonesia’s government has set a goal for electric vehicles (EV) to make up 20 percent of all domestic cars manufactured, equal to around 400,000 electric cars, by 2025.
With motorbikes favoured over cars nationally, the Indonesian government also aims to have electric motorbikes make up 20 percent of the total domestic motorbikes production. According to the Ministry of Industry, there are 15 domestic electric motorbike manufacturers with a production capacity of up to 877,000 electric motorbikes annually.
These ambitious targets for EV production have advantages: reducing dependency on oil imports and supporting a promising battery manufacturing industry. Both are likely to help improve Indonesia’s fiscal position and socio-economic development.
Consumer concerns over upfront costs, convenience, and functionality are some of the biggest barriers to EV adoption in Indonesia.
High upfront costs for electric cars are preventing nation-wide adoption, despite generous incentives from the government. The lowest price for an electric car is more than twice the price of most internal combustion engine (ICE) cars, even with incentives that can reduce upfront costs by 40 percent making EVs uncompetitive.
Major buyers of electric cars are currently limited to big companies or institutions with financial resources and sustainability strategies, rather than households or individuals. In Australia, purchases of electric cars for fleets may bolster the transition to EVs, as these vehicles are usually sold into the second hand market a few years later.
For electric motorbikes, it is functionality that concerns consumers. The price range for an electric motorbike is relatively close to the standard combustion engine motorbike, but uncertainties in the vehicle’s endurance have made customers reluctant to purchase. Lack of awareness of how electric motorbikes work and low availability also impacts sales.
Limited supporting infrastructure is preventing uptake of both electric cars and electric motorbikes, outside of Java and Bali. The state-owned electricity enterprise PLN has installed 57 charging stations, centralised in 35 locations across Java-Bali to date.
Domestic e-motorbike company, Gesits, has indicated that sales outside these regions accounts for less than 10 percent of total units purchased which is around 100 motorbikes. Increasing access to supporting infrastructure remains a crucial task for the government.
