Indonesia Electric Vehicle (EV) Market Outlook to 2030

Indonesia Electric Vehicle (EV) Market Overview

• The Indonesia Electric Vehicle (EV) market size reached US 1.35 billion in 2023, driven by the increasing demand for sustainable and eco-friendly mobility solutions, supported by government policies promoting the adoption of electric vehicles. Rising concerns over environmental pollution, coupled with fuel price fluctuations, have motivated the shift from conventional internal combustion engine (ICE) vehicles to EVs.

• Prominent players in the Indonesian EV market include Hyundai Motors, Wuling Motors, Toyota, Daihatsu, and local manufacturer Gesits. These companies are leading the push toward electric mobility in Indonesia. Hyundai, for instance, has established a significant EV production facility in Cikarang, West Java, while Wuling Motors is driving the market with affordable EV models, contributing to the rapid adoption of electric vehicles across the country.
• The joint venture between Foxconn and Indika Energy, called PT Foxconn Indika Motor (FIM), was established on September 22, 2022. This partnership focuses on manufacturing commercial electric vehicles and batteries, aiming to create a comprehensive electric vehicle ecosystem in Indonesia, leveraging the country's abundant natural resources. The establishment of this joint venture followed a memorandum of understanding signed earlier in 2022.
• Cities like Jakarta, Bandung, and Surabaya dominate the Indonesian EV market due to their established infrastructure and significant urban population. Jakarta, as the nation's capital and economic hub, leads the market, driven by its advanced EV charging network and heightened focus on reducing traffic congestion and pollution. Bandung and Surabaya similarly benefit from developed transportation infrastructure and a growing demand for cleaner mobility solutions.

Indonesia Electric Vehicle (EV) Market Segmentation

The Indonesia Electric Vehicle (EV) Market is segmented into further categories:

By Vehicle Type: The Indonesian EV market is segmented into electric two-wheelers, electric cars, and electric buses. In 2023, electric two-wheelers led the market due to rising demand for cost-effective and efficient transportation solutions in urban areas. These vehicles are favored for their affordability and ease of maneuvering through congested city streets. Additionally, government subsidies aimed at promoting electric motorbikes have further fueled the growth of this segment.

By Battery Type: The Indonesian EV market is segmented by battery type into lithium-ion batteries, lead-acid batteries, and solid-state batteries. In 2023, lithium-ion batteries dominated the market, driven by their superior energy density, longer lifespan, and faster charging capabilities. Investments from key players like LG Chem and CATL in local battery production have further strengthened the adoption of lithium-ion batteries, aligning with Indonesia's strategic focus on leveraging its abundant nickel reserves for domestic battery manufacturing.

By Region: The Indonesian EV market is segmented into North, South, East, and West regions. In 2023, the West region led the market, driven by its high population density, higher disposable incomes, and well-developed infrastructure. Cities like Jakarta and Bandung in this region benefit from an extensive network of EV charging stations and government-backed smart city initiatives, which have accelerated the adoption of electric vehicles across the area.

Indonesia Electric Vehicle (EV) Market Competitive Landscape

• Hyundai Motors: In 2023, Hyundai expanded its EV production facility in Cikarang, with a capacity to produce 150,000 units per year. This plant, established in 2022, is part of Hyundai's broader strategy to make Indonesia its hub for EV manufacturing in Southeast Asia. The company also launched its popular IONIQ 5 model in the Indonesian market, further cementing its market leadership.
• Wuling Motors: Wuling Motors has indeed become a significant player in the Indonesian EV market, particularly with the launch of the Wuling Air EV in 2022. Priced competitively at IDR 250 million (approximately USD 16,500), it has rapidly gained popularity, becoming one of the best-selling electric cars in Indonesia. By September 2023, Wuling had sold over 10,000 units of the Air EV in Indonesia.

Indonesia Electric Vehicle (EV) Market Analysis

Indonesia Electric Vehicle (EV) Market Growth Drivers

• Abundance of Nickel Reserves for EV Batteries: Indonesia possesses the largest nickel reserves globally, which are crucial for EV battery production, particularly for lithium-ion batteries that rely on nickel as a key component. The Indonesian government has focused on localizing EV battery manufacturing by utilizing this resource. In 2023, nickel production surged to 1.2 million metric tons, fueled by investments from foreign companies like LG Chem and Contemporary Amperex Technology (CATL). This local production of nickel will continue to drive the growth of the Indonesian EV market in the coming years.
• Supportive government policies: The Indonesian government has implemented a robust framework of incentives and regulations to stimulate electric vehicle (EV) adoption. For instance, the government has reduced import tariffs on EV components and introduced tax holidays for manufacturers. In 2023, the government provided subsidies of up to IDR 7 million (approximately USD 470) for electric two-wheelers, which has significantly influenced consumer purchasing decisions.
• Expansion of Charging Infrastructure: Indonesias PLN plans to build 31,000 EV charging stations by 2025, as announced in 2023. This initiative supports the growing EV market and focuses on urban areas like Jakarta and Surabaya. The expansion is expected to reduce range anxiety and make EV ownership more feasible, especially in traffic-heavy regions. This development is critical to accelerating EV adoption across the country.

Indonesia Electric Vehicle (EV) Market Challenges

• Underdeveloped Charging Infrastructure Outside Major Cities: While major cities like Jakarta and Surabaya are seeing progress in EV charging infrastructure, rural and less-developed regions remain underserved. This uneven distribution of charging stations limits the adoption of EVs in non-urban areas, hindering growth outside key metropolitan regions and making long-distance travel challenging for EV users.
• Limited EV Production Capacity: Despite attracting foreign investment, Indonesia's EV production capacity is still in its early stages. Local manufacturers primarily focus on two-wheelers, leaving a gap in affordable electric car production. This limitation may hinder the countrys goal of becoming a regional EV hub and meeting future demand. Expanding production infrastructure is crucial to support both local and export markets.

Indonesia Electric Vehicle (EV) Market Government Initiatives

• Regulation on Minimum Local Content for EVs: In 2023, the Indonesian government mandated that electric vehicles produced locally must meet minimum local content requirements to qualify for subsidies. This regulation aims to boost domestic industries and reduce reliance on imports. It is expected to stimulate growth in the EV supply chain, especially in battery production, assembly, and parts manufacturing, attracting international investments into the market.
• Partnership with Foreign Investors for Battery Development: Indonesia has partnered with foreign companies to build a strong battery production industry. In 2023, Indonesia announced a significant joint venture between Foxconn and PT Industri Baterai Indonesia (IBC) aimed at establishing a large battery production facility. This initiative is part of Indonesia's broader strategy to leverage its vast nickel reserves to enhance its role in the global electric vehicle (EV) supply chain, ultimately aiming to lower EV battery costs and, consequently, the prices of electric vehicles.

Indonesia Electric Vehicle (EV) Market Outlook

As the Indonesian Electric Vehicle (EV) market continues to evolve, several key trends are expected to shape its trajectory by 2028. With continued government support, technological advancements, and infrastructure developments, the EV market is poised for rapid growth over the next five years.

Future Trends:

• Battery Technology Advancements Will Drive Cost Reductions: Over the next five years, advancements in battery technology are expected to lower the cost of electric vehicles in Indonesia. By 2028, solid-state batteries are projected to enter mass production, offering longer ranges and faster charging times compared to current technologies. These improvements will make EVs more attractive to consumers and help align their upfront cost with that of ICE vehicles, promoting broader market adoption.
• Expansion of Charging Infrastructure in Rural Areas: As the Indonesian EV market grows, efforts will shift to installing EV charging stations in rural areas. By 2028, this expansion will facilitate long-distance travel and encourage EV adoption outside urban centers. Enhancing infrastructure in less-developed regions will help bridge the gap in regional EV adoption and promote broader use across the country.