Electric Vehicles Strengthen Their Foothold in Indonesia

In 2020, the Ministry of Transportation noted 60% of air pollutants in Indonesia were produced from vehicle exhaust fumes.

Meanwhile, the World Health Organization (WHO) stated that 9 out of 10 people in the world breathe polluted air. They even estimated that 7 million people die from exposure to polluted air each year.

Based on those findings, we know that it's time for the world to use environmentally friendly energy, and the transportation sector is a part of this.

Europe's Plan to Ban Fossil Fueled Vehicles

Unsurprisingly, the world is already getting ready for a new, more sustainable transportation option. A number of countries have declared they will stop producing or selling oil-fueled vehicles within the next decade.

In some media reports, Norway and the Netherlands said they will only sell electric vehicles from 2025. Not too far away from both countries, vehicle manufacturers in Sweden also announced they will only produce electric vehicles in 2030.

What about Indonesia?

Indonesian Government's New Policy Regarding EV

According to data from the Central Statistics Agency, the number of motorized vehicles in Indonesia is 136.1 million in 2020. This number is almost half of Indonesia's current population.

Needless to say, Indonesia still has a long way to go to achieve its zero emission goal. Until the end of 2019, the achievement of portfolio value in the category of sustainable business activities reached Rp 763 trillion (14% of total financing by banks).

Therefore, in 2020, the Financial Services Authority (OJK) issued several incentives for those who extended credit to the electric vehicle industry. These incentives followed Bank Indonesia's decision to impose a 0% down payment for electric car loans.

Furthermore, in March 2023, the government started a program to help purchase new electric motors and convert electric motors of IDR 7 million per unit for one million units until 2024. To encourage citizens even more, a 10% VAT (Value Added Tax) discount for purchasing electric cars will also be applied.

However, will all these efforts be paid off?

The Expanding Electric Vehicle Industry in Indonesia

Hopefully, yes. For now, the strong government support seems to allow EVs to flourish in Indonesia. For example, the use of EVs as the main transportation for delegates at the G20 Bali event. As a result, EV sales have increased dramatically. From January to September 2022, sales of EVs with batteries have reached 3,800 units. It’s a big jump from before January 2022, which was only 36 units.

However, the number appears to be still far from the target. Based on the virtual launch event for battery-based electric motorized vehicles (KBLBB) on Thursday, December 17th, 2020, the Minister of Energy and Resources, Arifin Tasrif, said the target for operating electric vehicles in Indonesia is 15 million units by 2030.

There is still time to catch up on the goal, but there are other areas Indonesia needs to work on. Producing and selling electric vehicles are not enough to guarantee a capable EV ecosystem. The country also needs many charging stations spread across strategic locations.

According to Director General of Electricity at the Ministry of Energy and Mineral Resources, Rida Mulyana, there are two types of battery-based motor vehicle charging infrastructure that we need. They are public electric vehicle charging stations (SPKLU) and public electric vehicle battery exchange stations (SPBKLU).

So far, 616 units of SPKLU and 1.056 SPBKLU have been set up in Indonesia. The government plans to have 10,000 SPBKLU units available in 2025 and 15,625 units in 2030. Meanwhile, for SPKLU, they have a target to install 2,465 units in 2025 and 7,146 units in 2030.

It’s still unclear whether the nation will be able to fulfill the targets by 2025 and 2030. Nonetheless, the future definitely requires a better and more sustainable way of commuting. In addition, the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, emphasized that if “Indonesia does not move quickly in implementing electric vehicles' usage, then there will be big risks it needs to face, especially in the economic sector.”