Chinese carmakers dominate Indonesian EV market

author: FutureCar Staff    

Electric vehicle (EV) sales in Indonesia are expected to experience rapid growth, despite currently being a niche product. At the 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 Indonesia as a production hub for EV batteries and cars, while also offering new consumer subsidies to boost domestic demand.

Neta Auto expressed excitement about entering the Indonesian market, acknowledging the country's huge potential for electric vehicles. They presented three models at the auto show and initiated pre-orders for the popular Neta V crossover. Great Wall Motor Group showcased the Ora Good Cat, a compact electric hatchback that attracted crowds of curious onlookers with its "cat-like features" and cheerful colors.

Neta Auto will become the second Chinese car manufacturer to establish an EV assembly line in Indonesia next year, following Wuling's production of the AirEV in 2022. Hyundai Motor Co. from South Korea also manufactures electric cars near Jakarta. However, Japanese automakers, including Toyota, Honda, Daihatsu, Mitsubishi, and Suzuki, have dominated the Indonesian car market but have been slow to introduce electric cars due to infrastructure and incentive limitations. Chinese companies are now looking to fill this gap.

Although the potential for EV growth in Indonesia is significant, electric cars currently account for a small fraction of total automobile sales. In 2022, only 10,327 electric battery-powered cars were sold, representing about 1% of combined car sales. 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 need to be addressed, including a lack of charging stations, the expense of buying an EV, inconsistent policies, and potential electricity supply issues in rural areas.

To stimulate 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 can benefit from zero percent export duty and value-added tax for electric cars and buses that meet certain domestic content requirements. Consumers can receive subsidies for purchasing onshore electric cars, reducing ownership costs. These initiatives complement Indonesia's efforts to develop domestic EV production facilities and utilize its rich reserves of nickel, a key component of lithium-ion batteries.

In addition to competing with Japanese brands, Chinese electric car makers face competition from South Korea, the United States, and Europe. French carmaker Citroen and Germany's Mercedes-Benz showcased their electric vehicles at the Indonesia auto show. The Indonesian government has also been courting American manufacturer Tesla to invest in car and battery manufacturing in the country. However, Chinese carmakers, such as Wuling, Chery, and DFSK Motor, have already made early investments in Indonesia and have gained a foothold in the market.

While Chinese electric cars garnered interest at the auto show, some people expressed concerns about their quality and reliability. Despite finding the Ora Good Cat "cute and practical" for city driving, Arsita Kamila hesitated to purchase one due to doubts about its longevity, particularly regarding the battery, which is the most expensive component.

FutureCar Staff