Can Indonesia become a major player in the global electric vehicle market?

JAKARTA: Indonesia has plans to become a major player in the global electric vehicle (EV) market, and investors, including those from Singapore, are looking to ride on the growing demand.
 
The country is set to introduce incentives on EV purchases this month in a bid to boost adoption of such vehicles. 
 
Authorities expect EVs to account for 5 per cent of total vehicle sales this year, and twice that share in 2024. 

SINGAPORE FIRMS INVESTING IN INDONESIA’S EV MARKET

Singapore tech company ION Mobility was among some 45 companies that featured at the Indonesia International Motor Show last month.
 
The event was an opportunity for the firm to showcase its electric motorcycle, the M1-S. 

“We're using these trade shows to do what I call incrementally soft, but firmer launches to appear more, frequency-wise, in the eyes of our consumers,” said Mr James Chan, founder and CEO of ION Mobility. 
 
“And when our factories are up, when our dealership experience centre is up, that's when we will shout a lot harder, and bring ourselves more directly into the hands of the customers.”
 
The M1-S electric bike has a top speed of 110kmh. On a fully charged battery, this motorcycle can travel a total distance of 150km. 
 
The bike is designed and engineered in Singapore, and the company is planning to start its assembly line in Indonesia by the end of this year.
 
The production plant for the M1-S will be located in Karawang, West Java, with a target to assemble up to 5,000 units per year.
 
ION Mobility also plans to move its battery production facility from Singapore to Indonesia.
 
The company believes it can achieve a high local content requirement for its electric bike.
 
“We were planning for 50 per cent by the end of this year, and we're gunning for 80 per cent by the end of next year,” said Mr Chan. 
 
“I think the ability to design and implement our own production line and facilities is what differentiates us from other players, where we're able to then achieve these high percentages very quickly from day one.”

BOOSTING DEMAND FOR ELECTRIC VEHICLES

Another Singapore EV company in Indonesia, Oyika, provides battery swap stations for electric bike users in the Greater Jakarta region and more recently in Bali.
 
Users do not need to buy batteries, but can simply exchange depleted batteries for fully charged ones.

“Adoption is very slow. It’s because of the inconvenience of having to charge at home,” said Oyika chief technology officer Roderick Chia. “If you use the bike for business, for instance, you are a delivery rider, you need to do a lot of trips. You cannot afford to charge the batteries during the normal office hours, when you're supposed to be working. 
 
“You need this thing to keep on moving. So you need to have the same experience as a normal bike out there where you just go to a petrol station, you pump in the petrol, and you just move."
 
The Indonesian government also plans to lower the adoption barrier by making it cheaper to own an EV.
 
It is offering purchase incentives, such as tax cuts for electric cars and subsidies for electric bikes.
 
Observers believe these incentives will boost the demand for EVs.
 
“The mindset is still not there, because the mindset of having a two-wheeler or four-wheeler is more towards a lifestyle kind of angle, not the usage kind of angle yet as a normal daily life usage,” said Singapore Business Federation’s Indonesia country head Hisyaamuddin Abu Bakar. 
 
“So, I think in terms of consumer angle, this will be a year to kick off and see a lot of sales going to increase in terms of volume." 

ATTRACTING BIG AUTOMAKERS

Indonesia, which has the world's largest reserves of nickel, is making itself indispensable for the EV industry, which uses the metal extensively.
 
The country is determined to attract investments from big automakers.
 
Negotiations with Tesla, for instance, have entered its final stage and industry players believe this will boost Indonesia's EV ambitions if the deal goes through.
 
“If you look at why China is one of the biggest EV users in the world, it is because at the beginning, they invited Tesla to compete with their own local manufacturers,” said Mr Chia. 
 
“By doing that, their own local manufacturers upgraded themselves to benchmark to the world standards.”

Read this story in Bahasa Indonesia here.