Chinese carmakers leading Indonesian EV market

author: FutureCar Staff    

Electric vehicle 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 the production of EV batteries and cars, while also providing consumer subsidies to boost domestic demand.

Neta Auto's vice president, Wang Chengjie, expressed excitement about entering the Indonesian market, emphasizing its huge potential for electric vehicles. Neta 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 drew crowds of curious onlookers with its "cat-like features" and cheerful colors.

Neta 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. from South Korea also manufactures electric cars near Jakarta. However, Japanese automakers like Toyota, Honda, Daihatsu, Mitsubishi, and Suzuki, which dominate the Indonesian car market, have been slow to introduce electric cars due to infrastructure limitations and lack of incentives. Chinese companies are now looking to fill this gap.

Although the potential for growth is significant, electric vehicles currently account for only a fraction of total automobile sales in Indonesia. In 2022, only 10,327 electric battery-powered cars were sold, representing 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 reliability 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. Producers also benefit from zero percent export duty and value-added tax for electric cars and buses that meet certain domestic content requirements. Additionally, consumers can receive subsidies and lower ownership costs for purchasing electric cars made in Indonesia.

The subsidy program complements Indonesia's efforts to develop domestic EV production facilities, taking advantage of the country's rich nickel reserves, a key component in lithium-ion batteries. The government aims for Indonesia to become one of the top three countries in the world producing EV batteries and electric cars by 2027. Promoting electric vehicles aligns with the country's strategy to reduce greenhouse gas emissions by 29% by 2030.

Competition in the Indonesian electric car market is heating up, 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. The Indonesian government has also been actively pursuing American manufacturer Tesla to invest in car and battery manufacturing in the country. However, Chinese carmakers, such as Wuling, already have a head start due to their early investments in Indonesia.

While Chinese electric cars attracted interest at the auto show, some concerns were raised about their quality and reliability. Potential buyers, like Arsita Kamila, find the Ora Good Cat cute and practical for city driving but hesitate due to concerns about the battery's longevity and cost.

FutureCar Staff