IEVO 2023: Building Indonesia’s Electric Vehicle Ecosystem

Jakarta, 21 February 2023 – Decarbonization of the transportation sector is a crucial strategy in climate change mitigation to prevent the earth’s temperature from rising beyond 1.5 degrees Celsius. In Indonesia, besides the use of biofuels, vehicle electrification can cut 23% of greenhouse gas (GHG) emissions from the transportation sector.

The Institute for Essential Services Reform (IESR) views the development of an electric vehicle ecosystem as an absolute to increase public interest in adopting electric vehicles, accelerate infrastructure distribution and develop the domestic electric vehicle industry.

The IESR in the 2023 Indonesia Electric Vehicle Outlook (IEVO) report notes that dependence on imported fuel has triggered inflation at the end of 2022 due to increasing subsidized fuel prices. Fuel consumption increased by an average of 1.2 million kiloliters per year between 2015 and 2020.

“The increase of fuel imports has eroded foreign exchange, weakened the exchange rate and forced the government to adjust fuel prices, which has an impact on inflation. As fuel price adjustments are politically unpopular and have an impact on people’s purchasing power, the government usually makes this a last alternative to cover the difference between the selling price and the cost of procuring fuel. Subsidies provided by the government deteriorate the fiscal capacity of the state budget. These could have been avoided if fuel imports were cut drastically by increasing the use of electric vehicles and substituting Internal Combustion Engine (ICE) vehicles,” said IESR Executive Director, Fabby Tumiwa.

Compared to ICE vehicles, electric vehicles are better at reducing emissions and having lower operating costs. IESR analysis shows that electric vehicles emit 7% less GHG emissions, and their operating cost per km is 14% lower than ICE vehicles. However, due to the limited availability of electric vehicle models, minimal infrastructure, and high initial investment, people are reluctant to switch to electric vehicles. 

“The government needs to look at the supply aspect of the Battery-Based Electric Motorized Vehicle industry and not just the demand. The tax deduction incentive for electric cars and IDR7 million for electric motorbikes is suitable. However, the eligibility of any car/motorcycle brand as the recipient of the incentives must be considered. The provision of this incentive must be linked to the development of the Local Content Requirements (LCR). Only brands with certain LCR may receive this incentive,” said Ilham R F Surya, Environmental Policy Researcher, IESR, who is also one of the authors of IEVO 2023

Furthermore, Ilham also said that electric two-wheelers (E2W) vehicle conversion could be an alternative to electrification at a lower price. Moreover, E2W is also a means of rejuvenating older motorbikes.

The government’s efforts to meet the GHG emission reduction target in the Nationally Determined Contribution (NDC) through a total of 15 million electric vehicles in 2030 can be seen from the availability of fiscal and non-fiscal policies. However, its fiscal policy is still focused on the demand side. Opportunities for the adoption of massive logistics ride-hailing drivers are expected to trigger the development of the electric vehicle industry in Indonesia.

“Currently, the electric vehicle industry from upstream to midstream has not been fully integrated. Some midstream projects, such as the production of new batteries, will run for at least 2025/2026. The government’s focus should be directed to accelerating the progress of the midstream project and convincing investors to carry out the many investment commitments that have been made,” said Pintoko Aji, co-author of IEVO 2023 and Renewable Energy Researcher, IESR.

For electric vehicle infrastructure, IESR assesses that although the installation has increased by 200% compared to 2021, the locations for Electric Vehicle Charging Station have not been spread evenly. 88% of Electric Vehicle Charging stations are still concentrated in Jakarta and Bali. Furthermore, the utilization of the Battery Swapping Station is still not standardized and only applies to certain brands.

“The government needs to facilitate Electric Vehicle Charging Station investment, one of which is changing the obligation to install three different types of ports in each Electric Vehicle Charging Station unit listed in MEMR Regulation No. 13/2020. The obligation to have three ports causes investment costs to swell to Rp 750 million-1.5 billion per Electric Vehicle Charging Station. Even though not all locations require three types of ports at once. If there is no such obligation, then with the same investment value, the number of Electric Vehicle Charging Stations built can be 3-4 times more,” Ilham added.

Ilham added that standardization of Battery Swapping Stations can be started from an electric motor with a battery capacity of 1.2 kWh or 1.44 kWh which is currently 79% of electric motors on the market, so it is not too difficult for manufacturing. Furthermore, the government also needs to standardize the shape and size of the battery to the electrical configuration in it.

Regarding the electrification of maritime and aviation transportation, Pintoko explained that the use of batteries in ships and aircraft has a challenge in the energy density of batteries, which makes them bigger and heavier, thereby reducing the cargo space of ships and aircraft payloads. This makes the electrification of maritime and aviation practical for a small scale with short distances.

IEVO 2023 recommends that the government strengthen upstream and midstream industry policies and regulations to reduce the price of electric vehicles, make rules to anticipate battery waste, increase interest from financial institutions for financing electric vehicles, and promote the use of electric vehicles.

Emission Reduction in Transportation

Kendaraan Listrik

Jakarta, February 20, 2023 – Decarbonizing the transportation sector is one of the key agendas to achieve Indonesia’s net zero emission target by 2060. The transportation sector is the second largest GHG emitter (23%), which road transport contributing 90% of the sector’s emissions, with total emissions in the energy sector closing to 600 MtCO2eq in 2021 (IESR, IEVO 2023).

In a low carbon scenario compatible with the Paris Agreement target (LCCP), emissions from transportation in Indonesia must decline to 100 MtCO2eq in 2050. Meanwhile, in the IESR’s calculation the entire energy sector, including transportation, must be near zero by 2050 to keep the global temperature rise below 1.5 °C. To achieve that, the electrification of transportation and utilization of other sustainable fuels should be prioritized.

One way to decarbonize road transport is by increasing the utilization of electric vehicles (EVs). The substitution of conventional internal combustion engine (ICE) vehicles with EVs is not only a solution to avoid direct GHG emissions from burning fossil fuels but will be a more economical choice given the high energy efficiency of EV technology. EVs are projected to represent more than 60% of vehicles sold globally by 2030. Hence, the supporting infrastructure for EVs in Indonesia, such as EV chargers, urgently needs to be prepared.

Despite the promises, people still doubt or even argue that EVs are not a truly GHG emission reduction solution. The reason is that the source of electricity for charging EVs still comes from fossil fuel power plants, particularly in Indonesia where about 67% of the electricity comes from coal-fired power plants (CFPPs). Moreover, EVs battery manufacturing processes are also highly energy-intensive and produce a high amount of GHG.

In this respect, the decarbonization of the transportation sector must be viewed from a long-term perspective with optimism. Concern regarding the source of electricity for EVs is indeed a great challenge to increasing EVs utilization. Therefore, EVs development plans should be integrated with the multi-sector decarbonization pathway because high EV adoption could potentially help another sector, namely the power sector.

The Bottleneck in Power Sector

One of the reasons for slow renewables development in Indonesia is the oversupply condition in the power system. Moreover, the system has a high reserve margin (power reserve), which is estimated to reach 56% in 2022 , while the typical reserve margin according to PLN’s RUPTL is in the range of 15-40%. The conditions are said due to the demand overestimation and the effect of the global pandemic. 

Unfortunately, most of the new operating power plants are CFPPs which cannot operate flexibly because they are constrained by take or pay agreements. Meanwhile, some CFPPs, especially older ones, are constrained to operate flexibly due to their limited technical abilities such as slow ramping rates, high minimum load, and long start-up time.

Based on these issues, there should be an increase in electricity demand or the retirement of fossil-fuel generators, with or without intervention, to allow higher renewables penetration. In this regard, EV utilization development, with the proper strategy, can be used as a tool that helps minimize problems in the power system. 

The high adoption rate of EVs could potentially absorb the excess electricity supply from the operating power generators. In IESR’s deep decarbonization scenario, the demand for transportation electrification will reach 136 by 2030 (approximately 28.6% of total electricity demand) [2]. In other words, the electrification of the transport sector can be a strategic approach to cut down the oversupply issue and make room for more renewables in the power system. Besides, electrification will significantly cut down the direct GHG emission and improve energy security through fuel import reduction.

Electric Vehicles Value in Power System

An electric vehicle is essentially a large battery connected to an electric motor and wheels. Simply, it is a moving energy storage asset. An EV car today has an average battery capacity of about 40 kWh which can be viewed as a valuable asset for the power grid. It is a fairly large capacity considering a home storage battery unit typically has a capacity of no more than half of the EVs’. Hence, any additional value of EVs should be enabled through vehicle-grid integration (VGI).

Various VGI schemes have been developed, namely, V1G (one-directional energy flow), V2G (bidirectional energy flow), V2B (vehicle to building), etc. Suitable integration strategies can benefit both EV owners and grid operators. Through V1G, for example, the grid operator may apply different charging tariffs at specific charging hours that would influence the charging behavior of EV owners. Grid operators can maintain the peak loads, avoiding additional operating costs or the need for capacity addition. In return, EV owners will get the incentive of low charging tariffs during off-peak hours.

In further implementations, VGI can be promoted to V2G. The EV fleets can collectively act like a stationary energy storage system (ESS) where the grid operator can buy electricity from EV’s battery to be supplied to the grid when needed. However, its implementation will require regulations related to interconnection.

In addition to regulations, VGI will require the development of supporting infrastructures relevant to the power sector development roadmap. Considering the penetration rate of renewables, the adoption rate of EVs, and today’s typical load profile, VGI may begin to be implemented through low tariff incentives at night so that EV owners do home charging overnight. However, once the power system has high solar PV penetration (as what the government plans for the future), there will be high electricity generation during the day. Don’t we need to prepare more public charging infrastructure? Or is there another strategy?

IEVO 2023: Electrification of Transportation to Reduce GHG Emissions

February 19, 2023 – The Institute for Essential Services Reform (IESR) launched Indonesia Electric Vehicles Outlook 2023 for the first time. This report discusses the status of the development of electric vehicles for passengers and the supporting ecosystem for developing electric cars in Indonesia. IESR views that climate change mitigation with a significant reduction in emissions from the transportation sector can be carried out in a participatory way by the community to adopt electric vehicles.

The transportation sector is a source of pollution and contributes to greenhouse gas (GHG) emissions. There are 600 MtCO2-eq of Indonesia’s GHG emissions in the energy sector in 2021; 23% come from the transportation sector. Land transportation is the most significant contributor to GHG emissions in the transportation sector, with more than 90%. Emissions from the transportation sector are predicted to increase by 53% in 2030 compared to 2015 and almost double between 2030 and 2060. Decarbonization of the transportation system by accelerating the adoption of environmentally friendly and low-emission electric vehicles could be one solution, along with the transition to renewable energy in the power sector

“The government has included the use of electric vehicles as one of the mitigation action plans in the Nationally Determined Contribution (NDC). However, the target set still needs to be aligned with the Paris Agreement to limit the increase in the earth’s temperature below 1.5 degrees Celsius by 2050. According to the IESR study, to achieve zero emission by 2050, the number of electric two-wheelers and four-wheelers vehicles must reach 110 million units by 2030,” said Fabby Tumiwa, Executive Director of IESR.

To achieve the target, Indonesia should accelerate the adoption of electric vehicles by supporting fiscal and non-fiscal policies. Since 2019, the government has been intensively pushing for industrial development and the use of electric cars. However, at the same time, several pro-fossil energy policies are still implemented, making adopting electric vehicles less than optimal. For example, government policies continue to subsidize fuel oil (BBM) and extend fuel sales to Euro II standards. These policies have reduced the attractiveness of consumers to acquire electric vehicles and reduced the benefits of switching to electric cars in the form of reduced fuel cost savings.

“Dependence on fossil fuels in our energy system, especially the transportation sector, makes our energy sector vulnerable to price fluctuations. The government is trying to reduce dependence on fossil fuels in the transportation sector through battery-based electric motorized vehicles (KBLBB). However, it is still difficult to find electric charging infrastructure, expensive purchase prices, and limited performance and models are the main obstacles to consumer adoption of KBLBB. These various obstacles need to be resolved by the government,” explain Faris Adnan, IEVO writer who is also a researcher on Electricity Systems, IESR.

The IESR findings show that by 2022, the adoption of electric motorbikes increased five fold from 5,748 units in 2021 to 25,782 units. In addition, the adoption of electric cars has almost quadrupled from 2,012 units in 2021 to 7,679 units in 2022. The promotion of electric vehicles drove this increase through the G20 event, which made electric cars the official vehicle of the delegation.

“Even though there is an increase, the number is still far from the target set by the government. The population of new electric motorbikes is 0.2% of the total motorbikes in Indonesia. Meanwhile, new electric cars reached 0.4%. Therefore, for KBLBB to be more attractive and affordable to the public, several additional policy instruments that are right on target are needed,” said Faris.

One such policy instrument is a combination of incentives for producers and market creation to accelerate the economies of scale for electric vehicles, especially two-wheelers electric vehicles, which have significant market potential. For this reason, IESR recommends that the government encourage the implementation of the Presidential Instruction for the purchase of electric vehicles by government agencies and state-owned enterprises and encourage adoption by the ride-hailing business and logistics to accelerate the adoption of electric cars by the market in the next 2-3 years.

Furthermore, to get more significant GHG emission reduction and environmental benefits, an increase in the mix of new renewable energy generators in the electricity system is also needed so that the emissions produced by KBLBB are lower than those from internal combustion engines.

“The IESR study shows that it will obtain new emission benefits if the renewable energy mix in the PLN electricity system is above 20%,” continued Faris

IESR will launch and discuss the Indonesia Electric Vehicle Outlook (IEVO) 2023 on February 21, 2023, 09:30 – 12:00: 00 WIB online via Zoom Conference + Livestream Youtube (IESR). This event is an effort to encourage the acceleration of electric vehicles in Indonesia, bring together various relevant stakeholders, and accelerate Indonesia’s steps to make an energy transition. The event will be attended by the Chairperson of the Indonesian Transportation Society’s Environment and Energy Transportation Forum, Indira Darmoyono, Director of Business Development Strategy & Special Projects Grab Indonesia, Rivana Mezaya, and others.

Indonesia Energy Transition Homeworks

(Jakarta, 12 January 2023) – By definition, the energy transition is an effort to change the energy supply from previously a coal-dependent source to cleaner energy. This is the effort that the Indonesian government continues to pursue to achieve national energy security and autonomy. However, there are still many tasks that must be fulfilled by the Indonesian government.

Handriyanti Diah Puspitarini, Research Manager of the Institute for Essential Services Reform (IESR) in the Ruang Publik KBR talk show: Energy Transition in Indonesia, How Far We’ve Come organized by Berita KBR (10/01) explained that the IESR report on energy transition monitors public readiness through surveys and government readiness through research.

“Bottom-up side has supported the procurement of cleaner energy, but based on the transition readiness framework studied in the Indonesia Energy Transition Outlook 2023, the government (top-down) still has many things to improve, especially in terms of commitment and regulation,” Handriyanti said.

Meanwhile, on the same occasion, Raden Raditya Yudha Wiranegara, IESR Senior Researcher stated that from the fossil fuel side, the government has not yet paid attention to carbon emissions produced by mining, oil and gas industries.

“The government only monitors carbon dioxide (CO2) emissions, which only has a fraction of methane’s heat-trapping ability, around 29-30 times less. If there is a reduction in methane gas by only 30%, it will help abate the temperature rise by 0.5°C,” said Raditya.

Handriyanti and Raditya then discussed the upward trend of buying electric vehicles. The high price then led to the government’s proposal for subsidizing these vehicles, which is expected to stimulate public demand and lower the price of electric vehicles eventually.

However, according to them, there are several points of public resistance regarding the energy transition and the use of electric vehicles. The first is the view that fossil fuels are cheaper than renewable energy.These prices are the result of government intervention in the form of price capping, subsidies and compensation. This will surely burden the state budget when global oil prices rise. Second, there is range anxiety, which means the fear of electric vehicles inability to travel long distances.

“The government then has to work around this by increasing the number of charging stations at rest areas in-between journeys,” said Raditya.

Handriyanti and Raditya discuss the government’s progress and tasks in the matter of energy transition from a techno-economic, regulatory and funding perspective. They said that the price of renewable energy technology is becoming more affordable every year, for example, the price of solar modules is 70% cheaper than 7-10 years ago and is predicted to decrease even more. Supporting Regulations such as Presidential Regulation No. 112/2021 which stipulate ministers to make a roadmap for retiring coal-fired power plants (CFPP) needs to be supported. However, the implementation of this regulation still needs to be monitored and improved, especially considering that coal and fossil funding is currently still 10 times larger than renewable energy funding.

“The presence of international forums such as the G20 has encouraged Indonesia to make commitments towards energy transition and attract financing for those efforts. It is hoped that this financing can help Indonesia achieve its target of a renewable energy mix of 23% by 2025,” they concluded.

The Government’s Electric Vehicle Infrastructure Target is Still Creating Range Anxiety

Electric vehicles have become increasingly popular recently. The Indonesian government itself has stated that the use of electric vehicles is one of Indonesia’s energy transition strategies. The Ministry of Energy and Mineral Resources announced a target of electric vehicle penetration of 2 million electric cars and 13 million electric motorcycles by 2030.

The magnitude of the electric vehicle penetration target certainly needs to be accompanied by a supporting ecosystem such as the availability of charging infrastructure, various models of EV, as well as incentives for electric vehicle users. Zainal Arifin, executive vice president of engineering and technology at PLN, at the IETD 2021, said that to answer the needs of the electrical energy ecosystem, the government opens opportunities for the private sector to develop charging infrastructure. So far, the adoption of electric vehicles has not been very encouraging. Until 2021, there were 5486 units of two-wheeled vehicles and 2012 four-wheeled vehicles have been certified. However, the adoption rate is still 654 units of electric cars.

The limited number of public charging stations is one of the factors that discourage potential consumers from buying electric vehicles. People need assurance if they run out of power in the middle of the trip, there are many charging stations available.

Although for a measured distance, this charging issue can be anticipated and calculated, but, it is necessary to consider the ratio between the number of vehicles and the SPKLU (Public Charging Station). If we fulfill the government’s target, the ratio of electric vehicles to SPKLU will be around 1:70. This ratio is still too small and causes anxiety when people use electric vehicles because of the limited number of charging spots.

Reflecting on the experience of several countries that have successfully penetrated large-scale electric vehicles such as China, the United States and Norway, in terms of providing public charging stations, the ratio between charging stations and electric vehicles is averagely 1:20. Indonesia is expected to continue to improve the EV ecosystem, one of which is charging stations.

“The government must have an attractive business model to provide massive charging stations so that investors are interested in taking part in the project,” explained Idoan Marciano, Electric Vehicle Specialist, IESR.

Electric vehicles are believed to be a clean, low-emissions transportation solution. Massive use of electric vehicles can reduce emissions in the transportation sector. In the context of Indonesia, massive penetration of EV must also be accompanied by rapid deployment of renewable energy in the power generation sector as the main power producer that will be used by electric vehicles.

The price of electric vehicles which are still higher than Internal Combustion Engine (ICE) vehicles is also highlighted. Government intervention to reduce the price of electric vehicles is needed, but also needs to be wise in designing the intervention scheme considering that electric vehicles are currently still targeting the upper middle class economy.

Particular attention can be paid to the development of faster two-wheeled electric vehicles to encourage penetration in society. The price difference, which is not as much as 4-wheeled vehicles, will be one of the driving factors for the electrification of two-wheelers. In addition, the public procurement of official vehicles for the government and public transportation can be a good strategy to transform the transportation system in Indonesia. 

A Pile of Government Homework to Develop Indonesia’s Electric Vehicle Market

Jakarta, August 5, 2021, The electric vehicle market in Indonesia is still not well managed, even though there is good progress from an industrial point of view. The development of the electric vehicle industry in Indonesia is specifically regulated in Presidential Regulation 55/2019 which provides a legal basis for the development of electric vehicles. The ratification of this regulation is a good thing to provide legal certainty as well as to show the government’s commitment to support the development of electric vehicles in Indonesia. Two years since the ratification of Presidential Regulation 55/2019, there have been positive improvements in terms of an increasingly integrated industry starting from the battery industry with the formation of the Indonesia Battery Corporation (IBC), and several car and battery manufacturers who have expressed interest in investing in Indonesia. 

 

The Ministry of Industry aims that by 2030 the penetration of electric vehicles will reach 600 thousand four-wheeler EV and 2.45 million two-wheeler. To achieve this target, it is necessary to build a market by growing interest in adopting electric vehicles in the community. Public interest in owning an electric vehicle is much influenced by the price of the electric vehicle itself. As of now, the price difference between electric vehicles and Internal Combustion Engine (ICE) cars is currently quite significant which makes people interested in adopting electric vehicles.

 

To grow the electric vehicle market, the Institute for Essential Services Reform (IESR) views that the government can take the following steps, such as implementing a number of incentives, for example with tax reduction and the flexibility to use certain routes.

 

Not only that, awareness about technology and the economic benefits of owning an electric vehicle needs to be further promoted. This relatively new technology is still not well known to the public. Even among owners and enthusiasts of electric vehicles, there is a kind of range anxiety, namely the feeling of worrying about not being able to reach the destination with the battery power of the car. The existence of charging facilities that are not evenly distributed from one place to another is another consideration. Ensuring the availability of supporting facilities, such as charging stations, is also important to support the adoption of electric vehicles.

In addition to introducing technology and ensuring the availability of supporting facilities, the public should also be encouraged to compare the total ownership cost between ICE vehicles and electric vehicles.

 

“The significant difference is in maintenance costs and fuel costs per kilometer which are considered more efficient on electric vehicles. But often prospective consumers do not calculate that far before buying a vehicle. This is good for raising public awareness as well as promoting electric vehicles,” said Fabby Tumiwa, Executive Director of IESR.

 

Regarding the incentives that will be given to electric vehicle owners, Fabby emphasized that the government must seriously think about the form of given incentives, considering that electric vehicles are actually classified as luxury goods. Indonesia can refer to several countries such as China and Norway regarding the types of incentives provided for electric vehicles.

 

Strengthening the Development of Electric Vehicle Ecosystem in Indonesia, IESR Compare with the United States, Norway, and China

Jakarta, 23 February 2021 

Aligned with the Paris Agreement, Indonesia needs to prioritize reducing greenhouse gas (GHG) emissions in the transportation sector to maintain the earth’s temperature below 2oC. In Indonesia, the transportation sector consumes 45% of total final energy, of which 94% comes from vehicle fuels. Exhaust gas emissions are almost one-third of the total emissions of the energy sector.

Many countries adopted the massive and aggressive penetration of electric vehicles to reduce GHG emissions. Indeed, the source of the vehicle’s electric power must also come from renewable energy.

The Institute for Essential Services Reform (IESR) examines best practices from other countries to create an ecosystem that supports the advancement of electric vehicles in Indonesia, through a study entitled Developing an Electric Vehicle Ecosystem in Indonesia: Lessons learned from the United States, Norway, and China. More than 100 people followed the launch of the study online (23/2). IESR also invited Firdaus Manti, Assistant Deputy for Maritime and Transportation Industry of the Coordinating Ministry for Maritime and Investment Affairs, Alief Wikarta, Lecturer and Researcher of the Department of Mechanical Engineering, ITS, and Muhammad Samyarto, PT Wika Industri Manufaktur (WIMA) as responders.

Fabby Tumiwa, Executive Director of IESR, said in his opening that Indonesia has to built aggressively the proper ecosystem to support the accelerated adoption of electric vehicles in Indonesia, by learning from the experiences of comparative countries in the study. 

“Sales of electric vehicles in Norway reached 54.3% in 2020 compared to only 1% in 2011. This is the result of the consistency of the Norwegian government in implementing policies to encourage the penetration of electric vehicles, “he said.

Norway is listed as the country with the highest market share for electric vehicles, which is more than 50%, while the total number of electric vehicles is around 430 thousand. Meanwhile, in 2019, China had a total of 3.4 million electric vehicles, and the United States was 1.5 million.

Indonesia itself, through the Ministry of Industry, is targeting the number of electric vehicles to reach 20% of the total vehicle production in 2025 (400,000 Low Carbon Emission Vehicles (LCEV) and 1,760,000 electric two-wheeled vehicles). However, until August 2020, there were only 2,279 roadworthy electric vehicles.

Five Undeveloped Electric Vehicle Ecosystems in Indonesia

Idoan Marciano, author of the study Developing an Electric Vehicle Ecosystem in Indonesia: Lessons learned from the United States, Norway, and China, assessing that the vehicle ecosystem in Indonesia has not been well developed, even though the government has issued Presidential Regulation No. 55/2019 which is the basis for accelerating the development of electric vehicles, but its derivative policies have not been able to increase the adoption of electric vehicles significantly.

Idoan explained that there are at least five ecosystems that need special consideration, namely a) policy, b) infrastructure/charging, c) industry/supply chain, d) public awareness, e) supply and availability of models.

“Generally, Indonesia is still lagging in all these aspects. From a financial policy perspective, Indonesia has provided various incentives but its total has only reduced about 40 percent of the price of electric vehicles after entering Indonesia. Furthermore, Indonesia also does not have regulations on fossil vehicle restriction, while the comparison countries have targeted 100 percent electric vehicles and banned conventional vehicles, “he explained.

In terms of charging infrastructure, Idoan views that the ratio of chargers to electric vehicles in Indonesia is still lower, namely 70: 1, while countries with high penetration of electric vehicles have a ratio of less than 25: 1.

As viewed from the industrial and supply chains, Indonesia also does not have the production capacity that is already operating to produce electric vehicle components, especially batteries. Meanwhile, China is capable of producing batteries up to 200 GWh / year.

Besides, people’s motivation to buy electric vehicles in Indonesia refers more to economic reasons and the availability of infrastructure, while people in comparison countries are more influenced by economic, environmental, and technological reasons.

Furthermore, Idoan found that the availability of supply and various models is also an important factor in the adoption of electric vehicles.

“In Indonesia, there are already 15 companies with production facilities for two-wheeled electric vehicles, with a total capacity of around 877 thousand units/year. In China, there are already 500 companies with a total production of more than 3.5 million units/year, ”he said.

This study recommends several strategies and policies that can be adopted by the government and all stakeholders to develop the electric vehicle ecosystem in Indonesia, as follows:

  1. Align the national electric vehicle adoption targets and make them binding
  2. Develop an integrated roadmap for the transition to electric vehicles
  3. Implement policies to limit the sales of fossil fuel vehicles 
  4. Provide financial incentives (from the central government) to reduce the purchase price of electric vehicles, a minimum of about 50 percent for electric cars, for electric motorbikes only 5-10 percent more expensive than the price of conventional motorbikes.
  5. Provide fiscal and non-fiscal incentives (from local governments) under the conditions of their respective regions 
  6. Impose technology transfer in collaboration with the international electric vehicle and battery manufacturers
  7. Issue supply-side policies, like fuel economy standard, conventional vehicles quota and to encourage production and increase the availability of electric vehicle models 
  8. Provide grants to research and academic institutions, as well as to EV and battery manufacturers to support R&D of electric vehicles and batteries technologies 
  9. Increase investment in domestic industrial and supply chain development of electric vehicles 
  10. Develop a more massive public charging infrastructure network through a mandate from government entities along with the subsidies for private developers 
  11. Electrify public transportation as an entry point for the adoption of the electric vehicle. IESR appreciates the ongoing collaboration.
  12. Promote electric vehicles as environmentally friendly vehicles and educate consumers on the benefits and incentives of purchasing EVs

Firdaus Manti, Assistant Deputy for Maritime Industry and Transportation at the Coordinating Ministry for Maritime and Investment Affairs, who attended the study launch webinar, said that the government will encourage and provide facilities for industry players.

“We want that Indonesia is not only a market so that we invite foreign manufacturing industries, especially four-wheelers, to be developed domestically. We also encourage hotel, retail, and small supermarket associations to provide two-wheeled public charging infrastructure, so that when shopping, they can charge their electric vehicles, “he said. 

Also, he emphasized the importance of close collaboration with all stakeholders including academics, the private sector, CSOs, and even the community as consumers to realize the development of electric vehicles in Indonesia.

Alief Wikarta, Lecturer and Researcher of the Department of Mechanical Engineering in ITS viewed that IESR study can be a solution for fuel diversification. He focuses on the community awareness ecosystem which is a challenge that deserves attention.

“Most of the Indonesian consumers are aware but not care. They know that, for example, certain technologies can reduce pollution but not using these technologies. Besides, our consumers have high price sensitivity, with only a thousand different prices, people will tend to choose cheaper ones. This is a challenge that requires a marketing strategy from production and government policies, “he added.  He said that Indonesia can also begin to develop a circular economy concept for battery recycling, which is one of the main components of electric vehicles.

Muhammad Samyarto, PT Wika Industri Manufaktur (WIMA), agreed on Idoan’s explanation regarding the quality of electric vehicles that are better than conventional vehicles.

“The problem of charging is just a concern. If you use an electric motor, you can manage your daily use of an electric vehicle. However, it remains a challenge for us together so that it answers people’s concerns, ”he said.

12 IESR Recommendations for Accelerating of Electric Vehicle Ecosystem Development in Indonesia

Tuesday, 23 February 2021-Indonesia needs to work harder to prevent the increase in the earth’s temperature below 2℃ by reducing the addition of greenhouse gas (GHG) emissions in the world, including by boosting the penetration of renewable energy and environmentally-friendly transportation.

The transportation sector contributes about a quarter of total global GHG emissions. The amount of this emission will increase along with the development of a country’s economy. In 2019, the transportation sector was the second-largest contributor to Indonesia’s greenhouse gas (GHG) emissions (157 million tonnes CO2 or 27%) after the industrial sector (215 million tonnes CO2 or 37%). Many countries in the world, including China, the United States, and countries in Europe are increasingly adopting electric vehicles which are proven to have lower emissions and better efficiency in the use of electric energy than conventional vehicles.

By online, the Institute for Essential Services Reform (IESR) launched a study on Developing an Electric Vehicle Ecosystem in Indonesia: Lessons learned from the United States, Norway, and China, which contains prominent strategic and policy recommendations for the government for the advancement of the electric vehicle ecosystem in Indonesia. 

“Nowadays, there are 17 countries that have not allowed the sale of fossil fuel-based vehicles from 2025-2040, one of which is Norway, which will ban internal combustion engine vehicles by 2025,” said Fabby Tumiwa, Executive Director of IESR.

Electric vehicles are seen as one of the solutions to reduce GHG emissions from the transportation sector. The development of electric vehicles in a decade has also grown rapidly. Fabby added that globally, electric cars have experienced a rapid increase in the last decade, from 0.1 market share in 2011 to 4.4% in 2020.

“Although in general, vehicle sales have decreased by 15 percent due to the Covid-19 pandemic, the demand for electric vehicles has increased in several countries. Compared to 2019, China increased 5 percent, Europe increased 10 percent, the United States increased 4 percent, “he explained.

Quoting data from the IEA, Fabby emphasized that for the earth’s temperature to be maintained according to the Paris agreement, the adoption of electric vehicles must be 13.4% of the total vehicles from 2030.

Indonesia Has Not Developed a Planned Electric Vehicle Ecosystem

Idoan Marciano, Author of the Study on Developing Electric Vehicle Ecosystems in Indonesia: Lessons from the Experience of the United States, Norway, and China, explains the reasons IESR chose these three countries as best practices that Indonesia can emulate. The countries that registered the highest electric vehicle adoption (2019) were China (3.4 million units) and the United States (1.5 million units), while the country with the largest electric vehicle market share in the world was Norway (greater than 50 percent).

IESR believes that the electric vehicle ecosystem in Indonesia has not been well developed. The ecosystem referred to in this study includes several aspects, namely: (a) incentives and supporting policies from the government, (b) charging infrastructure; (c) the model and supply of electric vehicles; (d) public awareness and acceptance; (e) the supply chain for batteries and electric vehicle components.

The Indonesian government, through the Ministry of Industry, is targeting the number of electric vehicles to reach 20% of total vehicle production in 2025 (400,000 Low Carbon Emission Vehicles (LCEV) and 1,760,000 electric two-wheeled vehicles). However, until August 2020, there were only 2,279 roadworthy electric vehicles.

“For electric motorbikes, 1,947 units do not reflect the number of adoptions after Indonesia launched an accelerated development program for electric vehicles because this figure still describes low-performance electric vehicles, which already existed from the previous year,” added Idoan.

To meet the target, IESR encourages the Indonesian government to implement fiscal policies, which will make electric vehicle prices more competitive. Reflecting on the experiences of the three countries, incentives can be in the form of VAT exemptions, registration taxes, import duties, and subsidies. Meanwhile, currently, the total incentives provided by the Indonesian government are only able to reduce about 40 percent of the initial price of electric vehicles entering Indonesia.

No less important is the provision of non-fiscal incentives by user needs, such as the ease of obtaining a number plate (registration) which is considered to greatly increase the attractiveness of electric vehicles in China, providing access to high occupancy vehicles in several states in America. States, and granting bus line access in Norway.

“Currently, Indonesia does not have any restrictions on the use of fossil-fueled vehicles, compared to comparison countries that have targeted 100 percent EV in the next 5-20 years,” said Idoan.

Besides, from the supply side, the government also needs to increase the quantity and availability of various models of electric vehicles by providing policies that encourage producers to produce more electric vehicles, such as by setting fuel efficiency standards at an early stage and using the electric vehicle credit mechanism when the market is already on as applied in China and California.

In supporting the creation of the domestic electric vehicle industry, the government can learn from China by providing special incentives for local manufacturers and using public procurement as a tool to boost production volumes for locally made electric vehicles, thereby accelerating economies of scale.

The construction and expansion of the charging infrastructure (SPKLU and SPBKLU) networks, as well as the preparation of home charging infrastructure, are needed to support the adoption of electric vehicles. The ratio of electric vehicles to the SPKLU in 2019 was the most massive in China, namely a ratio of 6.5: 1. The ratio represents countries with a more mature level of electric vehicle development. Meanwhile, if Indonesia follows the road map issued by PLN, it will only reach around 70: 1.

This study recommends several strategies and policies that can be adopted by the government and all stakeholders to develop the electric vehicle ecosystem in Indonesia, as follows:

  1. Align the national electric vehicle adoption targets and make them binding
  2. Develop an integrated roadmap for the transition to electric vehicles
  3. Implement policies to limit the sales of fossil fuel vehicles 
  4. Provide financial incentives (from the central government) to reduce the purchase price of electric vehicles, a minimum of about 50 percent for electric cars, for electric motorbikes only 5-10 percent more expensive than the price of conventional motorbikes.
  5. Provide fiscal and non-fiscal incentives (from local governments) under the conditions of their respective regions 
  6. Impose technology transfer in collaboration with the international electric vehicle and battery manufacturers
  7. Issue supply-side policies, like fuel economy standard, conventional vehicles quota and to encourage production and increase the availability of electric vehicle models 
  8. Provide grants to research and academic institutions, as well as to EV and battery manufacturers to support R&D of electric vehicles and batteries technologies 
  9. Increase investment in domestic industrial and supply chain development of electric vehicles 
  10. Develop a more massive public charging infrastructure network through a mandate from government entities along with the subsidies for private developers 
  11. Electrify public transportation as an entry point for the adoption of the electric vehicle. IESR appreciates the ongoing collaboration.
  12. Promote electric vehicles as environmentally friendly vehicles and educate consumers on the benefits and incentives of purchasing EVs

The study report Developing an Electric Vehicle Ecosystem in Indonesia: Lessons learned from the United States, Norway, and China can be downloaded at:

Mengembangkan Ekosistem Kendaraan Listrik di Indonesia

Developing EV Ecosystem in Indonesia – A Report Study Launch

The use of electric vehicles as one of the emission reduction actions in the transportation sector is expected to replace fossil fuel-based vehicles. The electric vehicle which has higher efficiency, makes the energy consumption required far less in comparison to conventional vehicles, so they can produce much lower emissions. If supported by the use of renewable energy in the electricity system, electric vehicles have the potential to be an effective decarbonization solution in the transportation sector. On the other hand, the adoption of electric vehicles
can have a positive impact on the country’s economy, especially through a reduction in fuel oil (BBM) consumption and opportunities to develop the local electric vehicle industry.

Globally in 2019, there were 7.2 million units of electric cars and around 350 million units of two / three-wheeled electric vehicles, the majority of which were in China, the United States, and countries in Europe. These countries have successfully adopted electric vehicles by implementing strategies and certain policies that build the electric vehicle ecosystem. Writing this study aims to provide strategic and policy recommendations for the Indonesian government to be able to build an electric vehicle ecosystem in the country from the lessons of three comparison countries, namely Norway, China, and the United States. The three countries were selected due to their high level of electric vehicle adoption, and considering several other factors. China and America

The union has successfully recorded the highest sales of electric vehicles, while Norway has the largest share of the electric vehicle market in the world.

This study defines the electric vehicle ecosystem including several aspects, namely: (a) charging infrastructure; (b) electric vehicle model and supply; (c) public awareness and acceptance; (d) the supply chain for batteries and electric vehicle components; (e) incentives and supporting policies from the government. In this study, the strategies and policies adopted by the three comparison countries are analyzed for each aspect of the electric vehicle ecosystem.