RI Races to Become a Key Player in Electric Vehicles
The era of electric vehicles is expected to arrive early, accelerated by consumer demand shifting to sustainable mobility.
By
KOMPAS TEAM
·5 minutes read
Kompas/Heru Sri Kumoro
An electric car from the MG manufacturer exhibited at the 2021 Gaikindo Indonesia International Auto Show (GIIAS) automotive exhibition at ICE BSD, Tangerang, Banten, Sunday (11/21/2021). Various types of electric vehicles were exhibited by a number of manufacturers at this exhibition.
JAKARTA, KOMPAS — Indonesia has ambitions to become a key player in the electric vehicle (EV) industry in the global supply chain, while at the same time developing the domestic market in order to reduce carbon emissions. However, amid the exponential growth in the adoption of electric vehicles, Indonesia must race to pursue this ambition.
Indonesia's opportunity to become an important player in the global electric vehicle industry is considered large. In addition to possessing the main raw material sources for electric batteries, such as nickel, cobalt and manganese, Indonesia also has large market potential. Mining downstreaming and the development of electric vehicles will also encourage added value, create job opportunities, reduce dependence on imported fuel oil as well as reduce carbon emissions.
In order to realize this ambition, the government has been issuing regulations and setting a roadmap for developing an integrated EV industry ecosystem. The ecosystem consists of raw material, battery and component industries, car and motorcycle manufacturers and battery recycling.
According to the Maritime Industry, Transportation Infrastructure and Defense Equipment director at the Industry Ministry, Sony Sulaksono, last week, the deepening of the industrial structure was carried out to strengthen Indonesia's position as a player in the global supply chain, not just as a market or producer of raw materials.
However, the development of the ecosystem is gradual and takes time. According to Sony, the development of the EV industry began with the limited import of completely built up (CBU) vehicles, followed by imports of completely knocked down (CKD) vehicles, meaning vehicles in a state of complete components, but not yet assembled.
Kompas/Heru Sri Kumoro
Visitors see a car on display on the second day of the 2021 Gaikindo Indonesia International Auto Show (GIIAS) automotive exhibition at ICE BSD, Tangerang Regency, Banten, Friday (12/11/2021). In addition to oil-fueled cars, this exhibition also displays electric cars.
Based on the road map, Indonesia will only import CBU and CKD vehicles until 2021. From 2022-2030, imported vehicles will be incompletely knocked down (IKD) as some of their components can be fulfilled by the country and assembled domestically. However, the roadmap created in 2019 will be reviewed and adapted to post-Covid-19 conditions.
Target
The Industry Ministry targets the production of electric cars and electric buses to reach 600,000 units out of a total production of 3 million units of four-wheeled motorized vehicles and more by 2030. In the same year, the production of electric motorcycles (two and three wheels) is targeted at 2.45 million units from a total production of 9.8 million two- and three-wheeled motor vehicles. This target is expected to reduce carbon emissions by 3.8 million tons.
President director of Indonesia Battery Corporation (IBC), a consortium of state-owned companies, Toto Nugroho, in a discussion held by the Policy Center of the University of Indonesia Alumni
Association, on Saturday (20/11/2021), said that it would take four to five years from mining activities to producing the battery. Therefore, the production of IBC batteries is estimated to be realized in 2025-2026.
At the global level, the adoption of EVs continues to grow, even amid the pressures of the Covid-19 pandemic. Europe, China and the United States are the main players. A number of premium car manufacturers will only sell electric vehicles in 2025-2030, while some will start in 2030-2035.
McKinsey in the article Why the Automotive is Electric, on 7 September 2021, said the government had introduced regulations and incentives to accelerate the shift to sustainable mobility.
KOMPAS/STEFANUS OSA
The Lexus LF-30 concept car is one of the attractions for visitors to the Gaikindo Indonesia International Auto Show at ICE BSD, Tangerang, Banten, 11-21 November 2021. This concept car is one of the electric cars of the future.
Explore investment
Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan, said that comprehensive investment was needed to build an electric vehicle ecosystem.
In addition to strengthening the structure of the manufacturing industry from upstream to downstream and the battery recycling industry, investment is needed for the provisions of sustainable electricity to replace fossil energy-based electricity as well as the construction of charging and exchanging infrastructure for electric batteries.
The target is that by 2030 as many as 31,859 public EV charging stations (SPKLU) and 67,000 public EV battery exchange stations (SPB-KLU) will be built. “We need massive investment for charging infrastructure. Bali will be the pilot project. There [in Bali], we will accelerate the use of electric cars and motorcycles within three to four years," said Luhut.
The efforts to attract investment and strengthen the EV ecosystem continue to be explored. The government is actively lobbying investors, with those being approached including automotive giants from Germany, BMW and Mercedes-Benz, the Industry Minister, Agus Gumiwang Kartasasmita said. Both of them intend to build an EV factory.
Meanwhile, Investment Minister Bahlil Lahadalia is in negotiations with other large German automotive companies, Volkswagen and BASF, to enter the electric battery supply chain. In this sector, Indonesia has started to build an electric battery factory by the IBC, which is a collaboration between state-owned enterprises (BUMN) and the Hyundai Motor-LG Energy Solution consortium.
Apart from that, the Industry Ministry noted there were four investment commitments for the construction of an electric vehicle factory with an investment value of tens of trillions of rupiah. First, Hyundai Motor Corporation's investment worth Rp 21 trillion (US$1.47 billion) in stages, the first in 2020-2021 and second 2021-2030. According to the plan, they will start producing battery-based electric vehicles in 2023.
The second commitment is from Mitsubishi with an investment value of Rp 11.2 trillion, which is schedules to be executed in 2024. Third, Toyota with an investment value of Rp 7 trillion in 2024 and Suzuki with an investment value of Rp 7 trillion to Rp 9 trillion in 2022-2026.
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