Chinese carmakers dominate Indonesian electric vehicle market

author: FutureCar Staff    

Electric vehicle (EV) sales in Indonesia are expected to experience rapid growth, despite currently being a niche product. At the recent Gaikindo Indonesia International Auto Show, Chinese carmakers Neta Auto and Great Wall Motor showcased their sleek electric car models, aiming to tap into the increasing demand for eco-friendly vehicles in the country. The Indonesian government is actively promoting EV production and consumption by offering consumer subsidies and positioning the country as a production hub for EV batteries and cars.

During the auto show, Neta Auto presented three models and initiated pre-orders for the Neta V crossover, which has a price tag of 379 million rupiah ($25,000). Great Wall Motor Group showcased the Ora Good Cat, a compact electric hatchback with unique features and vibrant colors that attracted a lot of attention. Neta Auto will establish an EV assembly line in Indonesia next year, becoming the second Chinese car manufacturer to do so after Wuling.

While Japanese automakers have traditionally dominated the Indonesian car market, they have been slow to introduce electric cars due to infrastructure limitations and lack of incentives. Chinese companies are now looking to fill this gap and capitalize on the potential for growth in the EV market. Currently, EVs account for only a fraction of total automobile sales in Indonesia, with just 10,327 electric battery-powered cars sold in 2022.

However, the Indonesian government has ambitious plans to increase the adoption of electric vehicles. By 2025, they aim to have 400,000 electric four-wheelers and 1.8 million electric two-wheelers on the roads. Challenges such as insufficient charging stations, high costs, inconsistent policies, and reliability of electricity supply in rural areas need to be addressed to achieve this goal. To boost demand, the government has introduced a subsidy program that covers the sales of electric motorcycles and cars, as well as the conversion of combustion-engine motorcycles to electric propulsion systems.

Producers of electric cars and buses that meet certain domestic content requirements are offered zero percent export duty and value-added tax by the government. Consumers can receive subsidies of up to 80 million rupiah ($5,130) for each purchase of an electric car made in Indonesia, and the government is committed to ensuring lower ownership costs. These efforts are complemented by the country's plans to develop domestic EV production facilities, taking advantage of its rich reserves of nickel, a key component of EV batteries.

Competition in the Indonesian EV market is intensifying, with Chinese carmakers not only competing with Japanese brands but also with players from South Korea, the United States, and Europe. French carmaker Citroen and Germany's Mercedes-Benz showcased their electric vehicles at the auto show, and the Indonesian government has been actively courting American manufacturer Tesla to invest in car and battery manufacturing in the country.

Chinese carmakers, such as Wuling, Chery, and DFSK Motor, have already made significant inroads in the Indonesian market. Wuling sold 8,000 units of its AirEV small electric car last year, accounting for approximately 80% of Indonesia's four-wheel EV sales. However, concerns about the quality and reliability of Chinese electric cars remain, with some potential buyers expressing doubts about the longevity of the batteries.

FutureCar Staff