Government action needed to kick-start Indonesia's electric vehicle market

11 July 2018 3 min. read

In a new report examining the Indonesian government’s national agenda for electric vehicle adoption, the Asian-centric strategy firm Solidiance has outlined several key areas of focus if its challenging targets are hoped to be achieved.

In accordance with the Indonesian government’s commitment to reducing the nation’s carbon emissions and high dependency on limited oil reserves, the government has identified the local transportation sector as a major area for address, with a national roadmap established to advance the automotive industry and promote greater electric vehicle adoption.

The ambitious uptake targets for electric vehicles in the country have been set at 2.1 million units for 2-wheeled vehicles by 2025. Yet, as it stands, there are approximately only 3,000 electric bikes currently on Indonesian roads. And while there were 1,300 charging stations available nationwide last year, the large majority of them were located in just the Jakarta area.

As a response, the Asian-centric strategy and management firm consulting firm suggesting in its resulting white-paper, 'Electric Vehicles in Indonesia: the Road Toward Sustainable Transportation', that these targets are unlikely to be achieved at current adoption rates unless certain key areas are first addressed; specifically, improved infrastructure and clearer regulation. 

Awareness on electric vehiclesTaking the pulse of 100 local motorcycle owners on their awareness and perceptions surrounding electric motorbikes, 37 percent were not yet aware that an electric bike model was available in the country. In terms of willingness to purchase an e-bike in the coming two years, only 17 of the respondents showed interest, although e-bikes were believed to be more fuel efficient and require less maintenance, capturing 95 percent and 84 percent of the feedback.

Outweighing these positives, was the negative response to ‘riding range’, cited by 68 percent of the respondents as a drawback, along with ‘model and appearance’ and ‘dimension and size’ (84 and 79 of those surveyed respectively), and charging infrastructure, a detracting feature for over four fifths of potential bike-riding customers.Perception on electric vehiclesIn the corresponding survey with local car owners, less than half knew that e-cars were available for purchase, and just 9 of the 100 respondents said that they would be willing to purchase an electric car in the next two years. While ‘model and appearance’ differed from the bike category, which for e-cars gained the tick of approval from 78 of those surveyed, the negative concerns for e-cars were the pricing and again the driving range and charging infrastructure.

Looking to the successful electric vehicle markets of China and Norway, the report contends that the Indonesian government will need to be the first step in the chain to help address these concerns, with clearer regulation and policy and the incorporation of incentives. With incentives, the cost per unit can be lowered, while without a ‘reward and punishment’ policy, the manufacturers will sit on their hands.

Infrastructure players, too, will be planning to wait until the above unfolds to get a clearer picture of the market – creating a vicious cycle with consumer perceptions of poor infrastructure negating purchasing and then delimiting market development. Yet, while the government can get the ball rolling, the report concludes that “active participation from all relevant stakeholders is required in order to create an ecosystem that is able to address the right issues and create significant traction for the Indonesian market.”