Writer : Liu Hongli, PT.COSL.INDO- OCD Executive Manager Correspondence Email: liu.hongli@cosl.co.id
LITERATURE REVIEW
An electric vehicle (EV) is a vehicle that runs on electricity. There are three main types of cars, commonly referred to as “electric”. When we talk about “electric vehicles (EV),” we’re talking about battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). The green driving plan does not cover hybrid cars.
Background And Significance Of EV-Car Market in Indonesia
In the 200-year industrialization process, fossil energy has been used in large quantities and widely. While creating industrial civilization, it has also brought increasingly serious by-products: environmental pollution, climate warming, and ecological deterioration, which have seriously affected human survival and development. a serious threat. We need to seek production and lifestyle that are more economical, sustainable, and more in line with nature and social ethics. A recognized idea is to use the new round of technological revolution as the fulcrum and the development of EV-Car as the breakthrough point to promote and realize the automobile industry revolution.
A. Oil shortage. As car ownership continues to grow, so does the demand for oil around the world. Automobiles and other industrial fields consume a large amount of oil every year, causing oil, a non-renewable energy source, to decrease sharply at a very high rate. The global oil crisis is becoming increasingly serious, and the relationship between energy supply and demand has changed profoundly. Source and resource constraints are increasingly intensifying, ecological and environmental problems are prominent, and the pressure to adjust structure, improve energy efficiency, and ensure energy security is further increasing. Energy development is facing a series of new problems and challenges.
B. Environmental pollution. The deterioration of urban environmental problems is inseparable from urban traffic pollution. Traffic pollution not only affects the ecological environment of the region, but also has a serious impact on the global environment. The exhaust gas, noise and dust generated by urban traffic have become the main sources of urban environmental pollution. In big cities around the world, exhaust gases emitted by motor vehicles are the largest source of air pollution. Traditional fuel vehicles produce a large amount of harmful gases during driving, which not only pollutes the environment but also affects human health. The main pollutants emitted by automobile exhaust are carbon monoxide (CO), hydrocarbons (HC), ammonia oxides (NOx), lead (Pb), fine particulate matter (PM), and sulfides. These primary pollutants can also generate secondary pollutants such as photochemical smog and acid deposition through atmospheric chemical reactions.
According to the latest data released by the Indonesian Automobile Industry Association, Indonesia’s automobile production reached 1,470,146 units in 2022, an increase of nearly 350,000 units compared with 2021, and a year-on-year growth rate of more than 31%, reflecting the huge growth potential of the Indonesian automobile industry.
As the fourth most populous country in the world, Indonesia has a population that is growing year by year and has a unique demographic dividend. At present, Indonesia’s car ownership per 1,000 people is only 99, while China’s car ownership per 1,000 people has reached 200. With the increase in Indonesia’s per capita income With continuous improvement, Indonesia is about to enter the stage of mass popularization of automobiles. Indonesia has the basic conditions for a large market for automobile production and sales.
Since 2012, Indonesia has reached the annual production mark of one million cars. However, the COVID-19 epidemic affected the Indonesian automobile market in 2020. Indonesia’s domestic automobile production fell by 46.37% year-on-year, with only 690,000 vehicles produced. With the passing of the epidemic, Indonesia’s automobile production in 2021 immediately returned to the million level, reaching 1.12 million units, a year-on-year increase of 62.56%.
With the recovery of Indonesia’s national economy, the increase in per capita income and the Indonesian government’s strong support for the automobile industry, especially new energy vehicles, the Indonesian automobile industry is expected to further develop rapidly. With huge development prospects, studying the development of the EV market in Indonesia is crucial to its environmental impact and will provide first-hand data for relevant researchers.
Current Status Of Car Market In Indonesia
Due to the unique social and cultural background, Indonesian families are mainly multi-person families. The number of passengers and convenience of use are important weighing factors when purchasing a car. The Indonesian government’s preferential policies in taxation and other aspects also make MPVs more affordable. Therefore, the 7-seat MPV model has long dominated the Indonesian passenger car market, accounting for about 30% of the market share. In recent years, relying on advantages such as styling, configuration, and comfort, SUV models have gradually gained market share and are currently the most growing segment. At the same time, with the development of the economy and the advancement of science and technology, the Indonesian automobile market has also shown a certain degree of intelligence and electrification trends, and pure electric vehicles have also developed rapidly in Indonesia.
Similar to other Southeast Asian countries, the Indonesian automobile market is dominated by Japanese brands, accounting for more than 90% of the market. The remaining 10% are Korean, American, European and Chinese automobile brands, such as Chinese automobile brands Chery and Wuling. , Dongfeng Xiaokang (Sales).
From the top ten best-selling models counted by the Indonesian Automobile Industry Association in 2022, we can see the preference of local Indonesian people for car brands and models. Ranking first is the affordable Honda Brio. Except for a Suzuki minivan, the rest of the models are all MPV models, and they are all Japanese brands.
Most of the cars produced in Indonesia are foreign brands, especially Japanese brands, and cars are produced in Indonesia through joint venture factories with local partners or wholly owned factories.
Chinese automobile manufacturers have also noticed the development potential of the Indonesian automobile market very early. Since 2015, Wuling Motors has established a wholly-owned subsidiary in Indonesia, and started laying the foundation for the project in August of that year. The project has accumulated a total of US$700 million and was completed and put into production in 2017. In addition to Wuling Motors, domestic Dongfeng Xiaokang (now renamed Thalys) has also invested in Indonesia and started producing cars. Chery has also implemented production in Indonesia through assembly. It is expected that more domestic car brands will enter the Indonesian market in the future.
Currently, the top ten car manufacturers in Indonesia are mainly Japanese brands. The top five are all Japanese brands, namely Toyota, Daihatsu, Mitsubishi, Suzuki and Honda. Korean Hyundai Motor ranks sixth and seventh. To the ninth place, they are all Japanese brands. It is worth noting that China’s Wuling Motors has also squeezed into the top ten automobile manufacturers in Indonesia, currently ranking tenth, with a total of 30,441 vehicles produced in 2022, accounting for 2.07% of Indonesia’s automobile production that year.
Current Status Of EV-Car Market In Indonesia
On July 20, 2023, statistics related to Indonesia’s automobile industry showed that Indonesia’s electric vehicle industry has entered a period of growth. In 2022, the sales of electric vehicles will reach more than 20,000 units, an increase of more than three times, and sales are expected to exceed 50,000 units in 2023. The Indonesian Ministry of Industry has previously issued a document clarifying the development goal of national electric vehicle production reaching 1 million units in 2035.
Indonesia has a relatively complete automobile industry foundation and rich mineral resources. The reserves of nickel, an important raw material for electric vehicle batteries, account for 52% of the world’s total, making it one of the largest producers of nickel. Indonesia uses its own resource advantages to vigorously develop the automobile manufacturing industry and regards the electric vehicle industry as a national priority industry. Indonesian President Joko Widodo pointed out that it is necessary to seize the global development opportunities of electric vehicles and establish an ecosystem for the entire electric vehicle industry chain.
In order to promote the development of the electric vehicle industry, the Indonesian government has launched a series of preferential measures. In April 2024, the electric vehicle tax reduction policy issued by the Indonesian Ministry of Finance will officially take effect. The preferential tax rates are divided into two levels. The sales tax on electric vehicles with a localization rate of 40% will be reduced from 11% to 1%, and the localization rate will be 20%. —The 40% sales tax on electric vehicles is reduced to 6%. Indonesia also stipulates that official vehicles used by all national agencies and their regional offices will be gradually converted to electric vehicles, and the national electric vehicle charging network will continue to be expanded. Indonesia’s national power company stated that it will strive to build 25,000 electric vehicle charging stations by 2030.
In terms of the production of electric vehicle battery raw materials, Delong Industrial Park and Qingshan Industrial Park invested by Chinese companies have strengthened cooperation with Indonesia in the production of ferronickel. Chinese car company Wuling has performed well in the Indonesian electric vehicle market. Research by the international rating agency Fitch shows that the increase in electric vehicle sales in Indonesia in 2022 will be due to the entry of more cost-effective models into the market, such as the Wuling “Aviation” priced at 250 million Indonesian rupiah (1 US dollar is equivalent to 15,000 Indonesian rupiah). brand electric vehicles are favored by many Indonesian consumers, with sales reaching 8,000 units less than half a year after their launch.
Arif Pramadana, deputy general manager of SAIC-GM-Wuling Indonesia Automobile Co., Ltd., said: “Wuling will introduce new energy vehicles to Indonesia and help Indonesia establish a supporting system for the automotive industry chain, taking into account economic benefits and green environmental protection. Investment from China and Technology will help Indonesia develop the electric vehicle industry faster and better.”
The Future Of Indonesian EV-Car Market
Judging from the actual situation in Indonesia, the automobile industry has always been an important pillar of the Indonesian economy, and electric vehicles, as an important direction for the future development of the automobile industry, have also received great attention from the Indonesian authorities. The factors that promote the sustainable development of Indonesia’s electric vehicle industry mainly include the following aspects: First, Indonesia is the largest economy in Southeast Asia, with a population of more than 260 million, abundant labor resources and low costs; secondly, Indonesia’s per capita car ownership The volume is still at a low level, and there is huge development potential in the field of electric vehicles; Furthermore, Indonesia is rich in nickel ore resources, which provides sufficient power for the supply of raw materials for fuel cells; in addition, the Indonesian government has introduced a series of favorable policies to comprehensively promote domestic Development of electric vehicles. All in all, the future development trend of Indonesia’s electric vehicle industry is still good.
According to the “Research Report on the Market Status of the Indonesian Electric Vehicle Industry and the Feasibility of Entry of Overseas Enterprises in 2021” released by the New Thinking Industry Research Center, in the global market, in recent years, with the advancement of related technologies and the improvement of public acceptance, The global electric vehicle market sales have maintained a steady growth trend, reaching 2.21 million units in 2019, an increase of 10% from the previous year, and their proportion in the entire automobile sales has also increased to 2.5%. The industry is in a stage of rapid development. It is expected that global electric vehicle sales will exceed 11.8 million units in 2025. Against this background, the Indonesian government has also begun to actively promote the development process of the domestic electric vehicle industry. Although the domestic industry development is still in its infancy, it has huge potential for future development.
In order to promote the sustained and healthy development of the entire automobile industry, while reducing dependence on imported oil and alleviating environmental pollution problems caused by automobile exhaust, the Indonesian authorities have established electric vehicles as a priority development area and introduced a series of favorable policies and incentives. Efforts have been made to attract foreign automobile manufacturers to invest and build factories in Indonesia, and to continuously stimulate domestic consumer demand for electric vehicles. According to the plan of the Indonesian Ministry of Industry, Indonesia will manufacture 400,000 electric vehicles in 2025, accounting for 20% of the total number of cars produced in Indonesia. In addition, the Indonesian government also hopes that Indonesia can become an exporter of electric vehicles and will produce Most of its electric vehicles are exported to overseas markets, and it will overtake Singapore and Thailand in 2030 to become the largest electric vehicle production and export base in Southeast Asia.
REFERENCES
1. Indonesian Central Bureau of Statistics. Development of Motor Vehicles by Type 1949–2018. 2018. Available online: https: //www.bps.go.id/linkTableDinamis/view/id/1133 (accessed on 30 June 2021).
2. Aziz, M.; Huda, M. Application opportunity of vehicles-to-grid in Indonesian electrical grid. Energy Procedia 2019, 160, 621–626.[CrossRef]
3. GAIKINDO. Indonesian Automobile Industry Data. 2021. Available online: https://www.gaikindo.or.id/indonesian-automobile-industry-data/ (accessed on 30 June 2021).
4. Zhou, Y.; Wang, M.; Hao, H.; Johnson, L.; Wang, H.; Hao, H. Plug-in electric vehicle market penetration and incentives: A global review. Mitig. Adapt. Strateg. Glob. Chang. 2015, 20, 777–795. [CrossRef]
5. CMS. Expert Guide to Electric Vehicles. 2018. Available online: https://cms.law/en/%0Aint/expert-guides/cms-expert-guide-to-electric-vehicles/united-arab-emirates (accessed on 27 October 2021).
6. IEA. Global EV Outlook 2020—Analysis. 2020. Available online: https://www.iea.org/reports/global-ev-outlook-2020 (accessed on 16 November 2021).
