The Growth of EV Transportation in Indonesia

One of the nations that has been impacted by climate change is Indonesia. The nation has set a goal to achieve net-zero emissions by 2060 or earlier and a reduction in greenhouse gas emissions of 29% from business-as-usual levels by 2030. The nation has made a number of efforts to accomplish this aim, including encouraging the use of electric vehicles (EVs). The nation is also setting up facilities and fiscal infrastructure to assist its efforts to enter the market for electric vehicles. Transportation is part of the government’s responsibility to enhance citizens’ well-being because domestic transportation, particularly on land lines, is essential to the recovery of the nation’s economy. Governments are responsible for resolving this by pursuing renewable or environmentally friendly energy innovations because even though fuel-powered vehicles are more affordable, the side effects of fuel (BBM) can jeopardize respiratory health through air pollution. In this case, the government also receives demands for people to be freed from uncertain financial problems, one of the problems’ roots being the unreasonable rise in fuel prices.

Electric vehicles have existed in Indonesia since 2012 under the 6th President of Indonesia, Susilo Bambang Yudhoyono. However, this innovation did not get a full government boost in its use, until 2014. By the time the Indonesian government’s leadership shifted hands to the 7th President of Indonesia, Joko Widodo, this innovation was massively disseminated to the public through the media with the aim of suppressing the global greenhouse effect. The sector for electric vehicles (EVs) is growing in Indonesia. The Indonesian government has set a lofty goal to have 110 million electric two- and four-wheelers on the road by 2030, followed by 3 million Low Duty Vehicles (LDV) and 2.4 million buses, according to research by the Institute for Essential Services Reform (IESR); the paper also notes that, in 2018, 28% of Indonesia’s energy sector emissions came from the transport sector, and that by 2030, this percentage is predicted to increase by 53% from 2015 levels.

The Indonesian government formally unveiled its EV roadmap in September 2020. By 2030, Indonesia hopes to become a significant player in the global EV industry, with a domestic manufacturing capacity of more than 600,000 four-wheeled EVs and 2.45 million two-wheeled EVs annually. By 2025, Indonesia hopes to have 2.5 million EVs in use, including 400,000 completely electric vehicles, and for EV sales to account for 20% of all auto sales. As opposed to the 267 EV charging stations in 195 sites as of March 2022, it also wants to develop charging stations in 2,400 locations. In addition, the Indonesian government has diplomatic relations with a number of foreign countries to invest in electric vehicles by building an electric vehicle factory; none other than South Korea, the United States, China, Japan, and some of the continent of Europe. With its ambitious goals for EV production and acceptance, it is evident that Indonesia is moving towards a more environmentally friendly future.

Additionally, according to Fitch Ratings, Indonesia’s EV penetration will increase from 2% in 2022 to roughly 5% of all domestic auto sales in 2023. New, more inexpensive EV models will be what fuels this trend. If government subsidies take the form of price breaks, penetration might reach over 5%. Furthermore, Bloomberg reports that Indonesia intends to provide EV purchase subsidies beginning in 2023 in order to boost sales. In three years, the nation wants to triple its EV sales, to 2.5 million. According to these reports, Indonesia’s EV market is expected to increase significantly over the next few years.

President Joko “Jokowi” Widodo of Indonesia has stated his faith in the nation’s electric vehicle (EV) ecosystem and thinks Indonesia can meet 60% of the world’s demand for EV batteries. Jokowi said that Indonesia has the necessary raw materials for EV batteries, including nickel, copper, bauxite, and lead, during a national meeting with the Chamber of Commerce and Industry (Kadin) in Jakarta. The nation is deficient in lithium, though. With the help of its domestic nickel supply, upgraded smelting facilities, and domestically produced EV batteries, Indonesia hopes to create 600,000 electric vehicles by 2030 and one million five years later. In order to develop Indonesia’s EV battery market, President Jokowi passed PR 55 in 2019, and the Indonesia Battery Corporation (IBC) was established in 2021. By the year 2025, Indonesia wants to produce two million electrified automobiles and motorcycles. In order to reach zero net emissions by 2060, Indonesia is promoting electric vehicles. The government has eliminated import taxes on EV components in order to promote the growth of the sector.