5 April 2023 – Electric vehicle subsidies have recently become an interesting topic on social media. Some consider this policy as a mismatch, but others argue that electric vehicles will help the energy transition process. In the Ruang Publik KBR event which was held online on March 20 2023, Ilham R.F. Surya, IESR Environmental Policy Researcher, explained that giving electric vehicle incentives would be useful in stimulating electric vehicle adoption. In addition, the government also needs to implement an Avoid-Shift-Improve (ASI) strategy to reduce emissions in the transportation sector.
According to Ilham, the use of the Avoid-Shift-Improve (ASI) paradigm will help reduce carbon emissions, especially for the transportation sector as one of the biggest emitters.
“If possible, avoid it first, such as reducing unnecessary trips. If not, do the shift by using public transportation. The final option is to improve or use environmentally friendly technology,” Ilham explained.
Furthermore, he explained that electric vehicles are set to meet the needs of environmentally friendly technologies. In terms of emissions and pollutants, electric vehicles are much lower than fuel vehicles, even when the electricity source is not optimal or they still use coal. According to him, using electric vehicles is a small act that can be done individually to reduce carbon emissions, apart from using energy wisely. Moreover, the energy sector is now the largest contributor to emissions in Indonesia, which is around 26%.
Regarding Indonesia’s readiness to adopt electric vehicles, Ilham stated that all parties were still waiting for each other to show readiness before taking further steps in developing electric vehicles. What will have the most impact, however, is the installation of Public Electric Vehicle Charging Stations (SPKLU) or charging units, which will be 3-4 times more effective in increasing electric vehicle adoption due to reduced range anxiety. In addition, electric vehicles have so far provided several innovations in technology, and in terms of safety, they are also following vehicle standards in general.
One of the efforts to increase the adoption of electric vehicles by the government is to provide incentives because there is still a gap between the prices of electric vehicles and fuel vehicles. Regarding the recipients of the incentives themselves, Ilham stated that the purchasing power of Indonesian people is still limited to electric motorcycle consumers, while electric cars are more affordable for 1% of the population. So, to increase adoption, incentives are better suited to be given to electric motorbike consumers.
“Before this incentive was implemented, it would be nice if the requirements for the Domestic Component Level (TKDN) were mandatory for incentives, because, by increasing adoption, it would simultaneously employ domestic workers,” Ilham explained.
Ilham also assessed that electric vehicles can help with accessibility in remote areas. However, the challenge that arises is electricity which often experiences rotating blackouts in the regions. Another challenge to electric vehicle adoption includes the price, not only the price of the vehicle but also the infrastructure. Apart from that, there is also range anxiety because the infrastructure is inadequate.
In the future, Ilham believes that as technology improves, the price of electric vehicles will decrease. The amount of decline per year is around 9%, so by 2030, it is expected to be equivalent to the price of a gasoline car. In addition, with the increasing adoption of electric vehicles, it is expected that Indonesia’s dependence on fuel, which until now has been subsidized, will decrease. By reducing emissions and pollution, coupled with reducing fuel consumption, of course the energy transition will develop more rapidly.
“But of course, the decision to buy an electric vehicle still depends on the buyer. Look at the needs and supporting infrastructure, and don’t depend on the fear of missing out (FOMO). For now, of course, give incentives to those who need it more,” Ilham concluded.
Projections of electric vehicles in 2023 are summarized in the Indonesia Electric Vehicle Outlook 2023.