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 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, offering subsidies and incentives to accelerate the shift towards electric transportation.

Neta Auto, for example, presented three models at the auto show and initiated pre-orders for the Neta V crossover, which is priced at 379 million rupiah ($25,000). Great Wall Motor Group showcased the Ora Good Cat, a compact electric hatchback that attracted a lot of attention with its "cat-like features" and vibrant colors. Neta Auto is set to become the second Chinese car manufacturer to establish an EV assembly line in Indonesia, following in the footsteps of Wuling, which started producing the AirEV locally in 2022. Hyundai Motor Co. from South Korea also manufactures electric cars near Jakarta.

Traditionally, Japanese automakers like Toyota, Honda, Daihatsu, Mitsubishi, and Suzuki have dominated the Indonesian car market, accounting for about 85% of total car sales in 2022. However, they have been slow to introduce electric cars due to infrastructure limitations and a lack of incentives. This has created an opportunity for Chinese companies to fill the gap and gain a foothold in the Indonesian EV market.

Although the potential for growth is significant, EVs currently represent only a small fraction of total automobile sales in Indonesia. In 2022, only 10,327 electric battery-powered cars were sold, accounting for approximately 1% of combined car sales. However, the government aims to have 400,000 electric four-wheelers and 1.8 million electric two-wheelers on the roads by 2025.

Despite the promising outlook, there are several obstacles that need to be overcome. These include the insufficient number of charging stations, the high cost of purchasing an electric car, inconsistent policies, and potential challenges with electricity supply in rural areas. To stimulate 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.

For producers, the government offers zero percent export duty and value-added tax for electric cars and buses that meet specific domestic content requirements. 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 reducing ownership costs. These initiatives complement Indonesia's efforts to develop domestic EV production facilities and leverage its abundant reserves of nickel, a vital component of lithium-ion batteries.

Indonesia's coordinating minister for maritime affairs and investment, Luhut Pandjaitan, envisions the country becoming one of the top three global producers of EV batteries and electric cars by 2027. The government's support for electric vehicles aligns with its commitment to reducing greenhouse gas emissions by 29% by 2030.

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 were among the brands showcasing their electric vehicles at the auto show, and the Indonesian government has been actively pursuing American manufacturer Tesla to invest in the country's car and battery manufacturing industry.

Chinese carmakers, however, might have a head start in Indonesia due to their early investments. Wuling, for instance, sold 8,000 units of its popular AirEV small electric car in 2022, accounting for approximately 80% of Indonesia's four-wheel EV sales. Other Chinese companies like Chery and DFSK Motor also have a presence in the country, with Chery planning to launch the electric version of its Omoda 5 next year.

While Chinese electric cars attracted interest at the auto show, some people expressed concerns about their quality and reliability. Potential buyers like Arsita Kamila found the Ora Good Cat cute and practical for city driving but were hesitant due to uncertainties about the longevity of the battery, which is the most expensive component.

FutureCar Staff