Scoping the Huge Prospect of Electric Car in Indonesia
By: Visi Saujadani
Tags: Illumination, Indonesia, Technology, Prospects, Electric Car

Scoping the Huge Prospect of Electric Car in Indonesia

Image by Mikes-Photography on Pixabay

Electric Vehicle (EV) has been developed since quite while ago. Some big players across Europe, United States, and Asia have been triggered to civilize EV in their country. As one of most-watched countries, in terms of economic growth, unfortunately Indonesia has just involved in EV market recently, particularly in electric car. In the other hand, Plug-In Hybrid Electric Vehicle (PHEV) car was introduced earlier and the arrival of electric car in Indonesia seem to be attractive for Indonesian.

Currently, there are three electric car manufacturers that have executed their plan in Indonesia, they are Hyundai, BMW, and Lexus. All of them have officially sold their electric car models (Hyundai Ioniq, Hyundai Kona, BMW i3s, and Lexus U300e) to the public through authorized dealers. Meanwhile, consumers can buy other electric car brand through importer, like buying Tesla from Prestige Motorcars.

Other manufacturers seem to continue in the future. For instance, Toyota are ready to invest around $2 billion on EV development in Indonesia and Elon Musk as Tesla CEO have talked directly with President of Indonesia to discuss the opportunity of investing on electric car in Indonesia. From this circumstance, firms have seen reasons and opportunities behind their decision on why they should expand their market to Indonesia.

Large Potential Market

Generally speaking, by 2018, Indonesia is ranked fourth as most populous countries in the world with about 267.7 million citizens. Central Statistics Agency of Indonesia reported, there are approximately 146.8 million vehicles in Indonesia, divided into cars, buses, freight trucks, and motorcycles. The data also shows the increasing car number around 1.9 million in two years (2016–2018).

Frankly, car’s portion on this number is only 11% since more Indonesians use motorcycle as their daily transport. In 2019, some SUV and LMPV models recorded 5% of sales growth, while brands’ sales in general fell by 10%. During this pandemic, car sales in Indonesia are heavily decreasing and expected to recover in 2022. Although motorcycle sales are also affected, the growth in the past four years is better than car sales.

Perhaps some of us might think, “Well, then what makes electric car special? Doesn’t electric motorcycle look more interesting?” The answer is: electric car is more widely discussed and recognized in Indonesia. Based on Frost & Sullivan internal survey, 41% respondents are interested in purchasing electric car. With more people get better life each year, it can’t be denied that more people also convert from conventional car to electric car, or even from motorcycle to car in order to get better comfort and occupancy. With some new electric car models arrived in Indonesia, it may trigger future consumers in a different way.

Regulations are with EV Owners

Before 2019, electric car was not that popular in Indonesia because the government was not ready yet to implement this vehicle presence. After two years, now there are seven main regulations from the government about electric vehicle. One of them is about the change of taxation model. Tax for cars are not charged based on the model anymore, but based on the emission produced by the vehicle. It means zero tax for electric cars.

In certain city, like Jakarta as capital city, there is an “odd-even rule” on Jakarta road. The rule says that on odd date, only vehicles with odd last number on the registration plate are allowed to pass. This rule is applied on specific roads, days, and period of time. What makes EVs different is that they don’t have to follow the rule. Officers can identify the difference between conventional and electric cars through the registration plate color.

As the government try to inject in electric car market, they currently plan to add more electric charging stations with specific rates applied, so consumers are not worried about running out of battery. In some landmarks, like Gelora Bung Karno stadium, the management have built charging station that can be accessed for free. Again, these types of movement from the government and external parties may stimulate the electric car market in Indonesia.

Image by Mohamed Hassan on Pixabay

Price War is Getting Real

Back in 2018–2019, electric car price used to be tremendously high in Indonesia. Not as high as Rolls-Royce models indeed, but an electric car at that time could cost between $91000–$183.000, depends on the brand and model). With that amount of money, consumers have wide option for luxury cars.

For example, Tesla’s model 3 costs about $106.000. Having same amount you have in pocket, you could buy compact premium sedan like BMW 3 Series with still getting $46.000 in return. Even Tesla’s model X is currently more expensive here than Mercedes-Benz S Class. All of them are reputable brands, but however BMW and Mercedes-Benz have such long history on this industry. Tesla as younger venture have to convince consumers on why they should choose their model compared to Mercedes-Benz’s flagship model.

One of game changers, like Hyundai, decided to put lower price (around $42.000) on their models to make them more affordable. In the near future, Nissan are going to introduce their electric model, Leaf, with the price range is quite similar with what Hyundai set. With this price, you may get a Peugeot 3008. It is not that cheap yet for average Indonesian consumers, because the range of most-sold cars in Indonesia is between $17.000–$28.000. At least, certain market segment could get the appetite. Once brands are confident with the prospect, they could reduce the costs and also the price.

Massive Electric Car Campaign

Speaking about eco-green environment, conventional and electric cars are separated between big gap. Manufacturers are competing to produce internal combustion engine on conventional cars more eco-friendly, but still they emit gases which contribute to pollution. We can’t say electric cars are 100% clean since it depends on the power plant that generates the electricity, but using electric cars on high population density areas is the least we can do to regain our healthy ecosystem.

And this campaign has been raised from years ago, but it is going upward recently. Some other benefits are considered important to Indonesia’s geographical condition, like low battery consumption and damage-free by flood (with certain flood height). Nowadays, many public figures with automobile expertise recommend using electric car and educating people on the benefits of it. The Government of West Java have also ordered electric cars for their daily operational inside the government.

From these advantages, it is not surprising that electric car manufacturers have started scoping the opportunity on investing their products in Indonesia. The big market and other considerations could make other manufacturers are on their way to invest, so they may provide wide variety of models with also more reasonable price range.