Jakarta. Indonesia stand out as a bright spot in the global transition to electric mobility, with strong growth in electric vehicle (EV) sales in 2024, even as major markets like Germany and Japan experience declining demand.

This year, electric cars accounted for more than one in five vehicles sold globally, with total sales projected to reach 17 million units. Indonesia is among the countries where EV adoption is accelerating, along with Australia, Brazil, Canada, and China, according to the International Energy Agency (IEA) report.

According to data from the Indonesian Automotive Industry Association (Gaikindo), EV sales increased from 13,916 units in January-November 2023 to 32,277 units in the same period in 2024, out of a total car market of 784,788 units.

"Although electric cars today often have lower total costs of ownership over their lifetimes due to reduced fuel and maintenance expenses, reducing upfront prices is key to boosting uptake. This trend is evident in China, where small, affordable models are driving mass adoption," the IEA stated in its December report.

While affordability remains a challenge in many emerging markets, Indonesia's EV market benefits from government incentives, growing consumer awareness, and a push toward cleaner energy solutions. However, like other Southeast Asian nations, Indonesia's preference for larger vehicles, such as SUVs, is offsetting the trend of declining EV prices, with more than 55 percent of electric car sales in 2024 falling into this category.

China's influence on the global EV market continues to grow, with its competitive pricing and dominance in small, affordable models. Chinese automakers, including BYD, are shaping the landscape in Indonesia and other markets, offering competitive prices that attract consumers. In 2015, major incumbent automakers accounted for a combined 55 percent of global electric car sales. By 2023, their share had dropped to 30 percent, while Chinese carmakers controlled more than 50 percent.

Earlier this year, Indonesia's Chief Economic Affairs Minister, Airlangga Hartarto, announced BYD's $1.3 billion investment in a manufacturing plant that is expected to produce 150,000 units annually by the fourth quarter of 2025.

"However, recent tariffs and countervailing duties on electric car imports from China, adopted by countries and regions including Canada, the European Union, Türkiye, and the United States, could limit the availability of affordable models in the short term," the IEA noted.

Indonesia has been leveraging its rich nickel reserves, a key component in EV battery production, to attract investments from international automakers. The country is building a domestic EV ecosystem and has encouraged Washington to strike a critical minerals deal, which could eventually enable batteries made from Indonesian nickel to enter the US market.

Globally, electric cars are expected to account for 45 percent of vehicle sales by 2030 and 55 percent in 2035, driven by technological advancements, policy support, and decreasing production costs. However, affordability remains crucial for mass adoption.

"Policy support for clean energy technology manufacturing from several governments in major car markets could also help bring down prices over time," the IEA stated.

In Indonesia, government subsidies and tax incentives have made EVs more accessible, though they still remain more expensive than internal combustion engine (ICE) vehicles for many consumers. Under the incentive program, the government cuts the value-added tax on electric car purchases to just 1 percent if the EV contains 40 percent locally made components.

Infrastructure development is also a priority. The Indonesian government has been working to expand charging networks to support the growing number of EV users. These efforts aim to address consumer concerns about range and charging availability, which are critical factors influencing EV adoption. As of November 2024, Indonesia had 2,490 public EV charging stations (SPKLU).

Globally, competition among automakers is intensifying, with Chinese manufacturers setting the pace for affordability and innovation. Meanwhile, European and US carmakers are adjusting their strategies to meet evolving consumer demands and regulatory standards.