Why car buyers in Indonesia are not yet shifting gears to electric vehicles

EVs currently account for less than 1 per cent of cars on the country's roads

A worker cleans Toyota's Electric Vehicle bZ4X, displayed at the Gaikindo Indonesia International Auto Show in Tangerang, near Jakarta. Reuters
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Indonesia's government used the Jakarta auto show to double down on plans to drive production and sales of electric vehicles in South-east Asia's largest car market, but buyers are not sold yet.

The price premium on electric vehicles (EVs), questions about the availability of charging stations and doubts about new brands are reasons to hold back for now, said visitors to the show in Tangerang on the outskirts of Jakarta.

Dody Hartono, who visited the show and plans to buy his first EV next year, said he wants a better deal.

"We have to make people interested first with EVs, starting with prices that should be 60 per cent cheaper," the 54 year old said.

Indonesia has ambitious EV growth plans as it races Thailand and India to build out an EV industry as an alternative to China, the world's largest producer. However, EVs currently account for less than 1 per cent of cars on its roads.

The government has slashed the value-added tax on EVs to 1 per cent from 11 per cent, bringing the starting price of the cheapest Hyundai Ioniq 5 below $45,000 from more than $51,000 in Indonesia.

Mr Hartono said a price of between $10,000 and $13,000 would be more appealing.

There are only two EVs on offer near that range, Wuling's Air EV Lite and Seres Group's E1 at about $12,300. The cheapest petrol-powered car in Indonesia, the Daihatsu Ayla, starts under $9,000.

China's Seres Group is the EV manufacturing partner of technology company Huawei.

By comparison, one of the best-selling EVs in China, the BYD Seagull, starts at just over $10,000, but other companies – and even China's own car makers – struggle to match that kind of pricing in export markets.

BYD's ATTO 3, the best-selling EV in South-east Asia in the first quarter, starts in Thailand at just over $31,000.

Hendra Pratama, 42, a customer shopping for an EV at the auto show, said the price premium in Indonesia needed to be reduced to attract lower-middle income consumers.

"It's not affordable," he said.

Toyota, its affiliate Daihatsu, and Honda account for two thirds of auto sales in Indonesia but have been slow to pivot to EVs.

Hendra Budi, 44, said price was not an issue for him but he wanted to have more confidence in the brands on offer.

"If Toyota or Honda launched a full EV, we will be interested," he said.

Toyota has said it has no plans to build an EV in Indonesia.

Indonesia's industry ministry announced at the auto show, which concluded on Sunday, that it would offer auto makers two more years to qualify for production incentives.

The announcement was followed by investment commitments from China's Neta EV brand and Japan's Mitsubishi Motors.

Indonesia has set a target of producing some 600,000 EVs by 2030. That would be more than 100 times the number sold in Indonesia in the first half of this year.

Indonesia's chief economic minister said he hoped the Jakarta auto show would drive sales of more than 26,000 vehicles, the number sold at the auto show last year.

The final number of cars sold – and the share of EVs in that – was not available as of Monday.

Updated: August 22, 2023, 4:00 AM