Chinese carmakers dominate Indonesian electric vehicle market

author: FutureCar Staff    

Electric vehicle (EV) sales in Indonesia are expected to experience rapid growth, although they currently represent a niche market. At the recent Gaikindo Indonesia International Auto Show, Chinese carmakers like 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 subsidies and positioning the country as a hub for EV batteries and cars.

Neta Auto, which presented three models at the auto show, plans to establish an EV assembly line in Indonesia next year. Similarly, Wuling and Hyundai Motor Co. already manufacture electric cars in the country. Japanese automakers like Toyota, Honda, Daihatsu, Mitsubishi, and Suzuki have long dominated the Indonesian car market but have been slow to introduce electric cars due to infrastructure limitations and lack of incentives. Chinese companies are now looking to fill this gap.

While the potential for growth is significant, EVs currently represent only a fraction of total automobile sales in Indonesia. The government aims to have 400,000 electric four-wheelers and 1.8 million electric two-wheelers on the roads by 2025. However, several obstacles hinder this progress, including the insufficient number of charging stations, the high cost of purchasing EVs, inconsistent policies, and potential electricity supply issues in rural areas.

To boost the demand for electric vehicles, 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 also benefit from zero percent export duty and value-added tax for EVs that meet certain domestic content requirements. The government aims to develop domestic EV production facilities to take advantage of the country's rich reserves of nickel, a crucial component in EV batteries.

Competition in the Indonesian EV market is intensifying, with Chinese carmakers competing against Japanese, South Korean, American, and European brands. French carmaker Citroen and Germany's Mercedes-Benz showcased their electric vehicles at the auto show, while the Indonesian government has been actively courting American manufacturer Tesla. However, Chinese carmakers like Wuling, Chery, and DFSK Motor have already gained a foothold in the market, with Wuling's AirEV accounting for approximately 80% of Indonesia's four-wheel EV sales in 2022.

While Chinese electric cars attracted interest at the auto show, some potential buyers expressed concerns about their quality and reliability. The longevity of the battery, in particular, was a common concern. Despite these reservations, the Indonesian government's efforts to promote EVs and reduce greenhouse gas emissions align with its goal of becoming one of the top three countries globally in EV battery and car production by 2027.

FutureCar Staff