Indonesia Aims to Produce 600,000 Electric Cars

Jakarta. The Indonesian government seeks to become electric vehicle production hub in the region, aiming for an output of 600,000 electric cars and 2.5 million electric motorcycles by 2030, an official said on Wednesday.

The country also is preparing an ambitious plan to become a key player in the global supply chain of lithium-ion battery in line with the EV industry.

“Battery is the most valuable component inside an EV, it accounts for 35 percent of production costs,” Industry Minister Agus Gumiwang Kartasasmita said in Investor Daily Summit, a major investment forum that brings together top government officials and business executives from various sectors.

“Indonesia’s key advantage in EV industry is nickel-based lithium-ion battery because we have world’s biggest nickel reserves,” Agus told the virtual gathering hosted by leading business newspaper Investor Daily.

The government has issued the so-called EV Roadmap detailing various incentives to attract more investment in the rapidly growing EV industry. According to the roadmap, EV sales are exempt from luxury tax and import duties, while consumers also enjoy low-interest installments. 

In addition, EV owners are entitled to upgraded home electricity capacity with discounted fees, Agus said.

The incentives involve inter-agency works from, among others, the central bank, state-run electricity company PLN, the Finance Ministry, the National Police and the Industry Ministry.

Agus claimed there are nine companies in Indonesia ready to support the battery industry -- from raw material suppliers to final product manufacturers. 

One of the battery makers is Industri Baterai Indonesia (IBI), whose president told the webinar that mass production will start in 2025.

“One factory will become operational in 2022 to produce 10 gigawatt hours of battery,” Toto Nugroho said.

IBI is a consortium of four state-run mining and energy companies, including Pertamina, Antam, PLN and Mining Industry Indonesia.

Hyundai
South Korean automaker Hyundai is the first company to announce a plan for EV production in Indonesia, having already set up a $1.5 billion factory in the West Java town of Cikarang.

The company even said its first EV made in Indonesia will roll out as soon as March next year.

The factory is currently developing two models of conventional gasoline cars, those with internal combustion engine (ICE).

“For next year, we plan to launch two ICE models and an EV model. Around March 2022, we will launch completely-knocked-down EV in Indonesia,” Lee Kang Hyun, chief operating cfficer of Hyundai Motor Asia Pacific, told the webinar.

The West Java factory has a capacity of up to 200,000 units a year, according to Hyundai.

Lee said global EV sales will increase dramatically from 2 million units last year to 30 million by the next decade. 

While Japanese automotive giants appear to be less enthusiastic in EV development, they have pledged new investments in hybrid car production in Indonesia.

Minister Agus said during a meeting with Japanese automakers in March, Toyota pledged to add investment by Rp 28.3 trillion, Honda promised Rp 5.2 trillion, Suzuki agreed Rp 1.2 trillion and Mitsubishi vowed Rp 11.2 trillion until 2024.