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 Indonesia, the fourth most populous country in the world. The Indonesian government is actively promoting the country as a production hub for EV batteries and cars, while also offering consumer subsidies to boost domestic demand.

Neta Auto, presenting three models at the show, initiated pre-orders for the Neta V crossover, priced at 379 million rupiah ($25,000). Great Wall Motor Group showcased the Ora Good Cat, a compact electric hatchback with distinctive "cat-like features" and vibrant colors that attracted a lot of attention. Neta Auto will become the second Chinese car manufacturer to establish an EV assembly line in Indonesia next year, following Wuling's local production of the AirEV in 2022. Hyundai Motor Co., a South Korean automaker, also manufactures electric cars near Jakarta.

Japanese automakers, such as Toyota, Honda, Daihatsu, Mitsubishi, and Suzuki, have long dominated the Indonesian car market, accounting for about 85% of total car sales in 2022. However, they have been slower in introducing electric cars due to factors like inadequate infrastructure and incentives. Chinese companies are now looking to fill this gap and expand their market share in Indonesia.

Despite the huge potential for growth, 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. Challenges such as a lack of charging stations, high costs, inconsistent policies, and potential electricity supply issues in rural areas need to be addressed to achieve this goal.

To stimulate the demand for electric vehicles, the Indonesian 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. Additionally, producers can benefit from 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 aims to ensure lower ownership costs.

Indonesia's efforts to develop domestic EV production facilities are driven by the country's abundant reserves of nickel, a crucial component of lithium-ion batteries used in EVs. The government aims to become one of the top three countries in the world producing EV batteries and electric cars by 2027. Promoting electric vehicles aligns with Indonesia's strategy to reduce greenhouse gas emissions by 29% by 2030.

Competition in the Indonesian electric car market is not limited to Japanese brands. Chinese carmakers also face competition from South Korean, American, and European players. Brands like Citroen and Mercedes-Benz showcased their electric vehicles at the Indonesia auto show. The Indonesian government has actively pursued American manufacturer Tesla to invest in car and battery manufacturing in the country, with President Joko Widodo visiting Elon Musk in Texas and Tesla signing contracts to purchase nickel from Indonesian companies. However, Chinese carmakers, with their early investments in Indonesia, may have a head start. Wuling, for example, sold 8,000 units of its AirEV small electric car last year, accounting for approximately 80% of Indonesia's four-wheel EV sales.

While Chinese electric cars gained interest at the auto show, some people expressed concerns about their quality and reliability. Arsita Kamila, for instance, found the Ora Good Cat attractive for city driving but questioned its longevity, particularly the battery, which is the most expensive component.

FutureCar Staff