Jakarta, Indonesia, July 15, 2018 --(PR.com
)-- Solidiance's latest white paper, “Electric Vehicles (EV) in Indonesia: The Road Towards Sustainable Transportation,” explores the current state of EV in Indonesia, the growth drivers and challenges of EV adoption, as well as identifying areas of opportunity for major industry players to tap into.
According to the author of the white paper, Gervasius Samosir, the EV adoption in Indonesia is still considered at a very early stage given its low vehicle population, availability of supporting infrastructure, and unclear regulations on EV in the market.
“The adoption of EV is expected to significantly grow once clear regulations have been issued. Active participation from all relevant stakeholders, including policymakers, is required in order to create an ecosystem that can address bottlenecks and increase significant traction,” Gervasius, who is also an Associate Partner at Solidiance, said.
Switching to electric vehicles and its current state
Indonesia’s continuous dependency on fossil fuels as the primary energy source is causing high levels of carbon dioxide (CO2) emissions and sparking discussion on energy sustainability issues. In 2016, the transportation sector was the second highest sector for energy consumption and has been identified as one of the highest sources of CO2 in Indonesia. To improve local air quality and address climate change, the government must take innovative policy actions in the transportation sector and consider electric vehicles as a possible future solution.
As the roadmap on EVs is still being prepared by the Ministry of Industry, the EV adoption progress has been slow. According to Solidiance, it is unlikely that the target would be achievable at current growth rates without proper regulations and a supporting infrastructure in place.
In December 2017, there were around 1,300 electric recharging stations available nationwide spread across 24 cities, of which 71% of them were located in the greater Jakarta area. PLN, a state-owned enterprise and the only producer of power supply and distribution, is the only corporation able to develop and install electric recharging stations in Indonesia.
Market perception towards EV in Indonesia
Solidiance interviewed 100 motorcycle owners and 100 car owners to understand customer awareness and their views on electric vehicles. The study showed that while many have expressed interest in alternative fossil vehicles, others still have skeptic views on product features, charging infrastructure, pricing, and therefore reluctant to switch to EV in the next few years. Original Equipment Manufacturers (OEM) brands, on the other hand, are consciously waiting for market readiness and infrastructure development, as well as the regulation from the government, to take action.
Drivers and key challenges
Drivers of electric vehicle uptake include Indonesia’s affordable electricity cost of only USD 0.1/kwh, a growing middle affluent class with higher purchasing power, and favorability to use personal vehicles as the main mode of transport. However, challenges remain in the market. Unclear policy regulations related to EV and high price points are just some drawbacks of EV application.
The impact from no clear incentive schemes including tax scenario could result in low willingness for customers to purchase EV. Moreover, most OEMs operating in Indonesia have yet to launch any EV models and commit to having EV production lines domestically, while infrastructure players are waiting on regulations concerning recharging stations and/or establishing parts manufacturer such as battery.
Pushing forward EV growth
To further support EV growth in the domestic market, the government has issued a series of incentive schemes, including:
- Gradually controlling the sales of fossil fuel vehicles and completely stopping sales by 2040
- Giving incentives such as the exemption of import duty given to Complete Knocked Down (CKD) type until 2022 and to Incomplete Knocked Down (IKD) type until 2025, which grants 0% tax on luxury goods
- The provision and standard of recharging stations infrastructure and the electricity tariff applied to recharging stations infrastructure to be regulated by the Ministry of Energy and Mineral Resources
- The technical provisions of EV, such as registration of vehicle identification number and type, technical requirements and roadworthiness, identification, classification and registration of EV
- Waste handling of batteries or storage media from EV to be done by recycling
But while these are ambitious plans, the regulations follow a roadmap which, until today, has not been clearly defined by policymakers. The collaboration between relevant stakeholders, including policymakers, OEMs and infrastructure players, is then crucial to successfully build a sustainable ecosystem of EV adoption in Indonesia. The EV market may be in a nascent stage of development today, but all areas surrounding the expansion of EV still provides ample opportunities that may be worth assessing to further implement and gain market share in the foreseeable future.
To download the full white paper, copy the following link to your web browser: http://bit.ly/2zxB51Z