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The Need for Supportive Policy for the Indonesian Electric Vehicle Development

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In 2019, the government issued Presidential Decree 55 of 2019 concerning the Acceleration of Battery-Based Electric Motor Vehicles (KBLBB). The Presidential Decree stated that the achievement targets for electric car production are 2200 and 2.1 million electric motorbikes by 2025. It is an ambitious target to achieve, considering that currently the electric vehicle ecosystem in Indonesia still needs a lot of development.

The paper “Developing an Electric Vehicle Ecosystem in Indonesia: Lessons learned from the United States, Norway and China” issued by the Institute for Essential Services Reform (IESR), explained that what is meant by an electric vehicle ecosystem includes: (1) charging infrastructure; (2) the model and supply of electric vehicles; (3) public awareness and acceptance; (4) the supply chain for batteries and electric vehicle components; (5) incentives and supporting policies from the government. This study specifically looks at the strategies and policies used by three countries, the United States, Norway, and China, in building their electric vehicle ecosystem.

The study explained that the key to the success of the three countries in increasing the penetration of electric vehicles is by providing an adequate supporting ecosystem. Given the government’s ambitious targets for electric vehicles, it is necessary to immediately develop an adequate ecosystem for electric vehicles.

However, the development of electric vehicles in Indonesia faces various obstacles, one of which is that there is no integrated target and clear road map between the institutions that oversee the development of Indonesian electric vehicles. Currently, there are at least 2 different targets issued by the government regarding electric vehicles. First, the National Energy General Plan (RUEN) states that the target for electric vehicles is 2,200 cars and 2.1 million motorbikes by 2025. The Ministry of Industry (Kemenperin), on the other hand, has an even more ambitious target for these electric vehicles, namely, 20 % of total vehicle production (400,000 cars and 1,760,000 motorbikes) in 2025 to 30% (1,200,000 cars, and 3,225,000 motorbikes) by 2035.

Alief Wikarta, a lecturer and researcher at the Sepuluh Nopember Institute of Technology in Surabaya, stated that the development of an electric vehicle ecosystem cannot be carried out with a business as the usual scheme. The role of private investors is needed to participate in providing the electric vehicle ecosystem in Indonesia.

One of the obstacles for electric vehicles today is that they are still more expensive than conventional vehicles. The component that makes electric vehicles become high cost is the battery. 

“40-50% of the EV price is allocated to the battery price. If there is a business scheme that can incur battery costs from the price that consumers have to bear, the price of electric vehicles will drop drastically, “explained Alief.

Various schemes to reduce the price of electric vehicles were introduced, one of which was introduced by the Ministry of Energy and Mineral Resources, specifically the battery swap scheme. In this scheme, the cost of batteries can be reduced, provided that an investor is willing to invest and open a swap station.

Whatever scheme will be adopted as a solution, the government needs to find investors who are ready to run a marathon in building this battery swap ecosystem, such as by bearing the cost of the battery and making the swap station. This long-term commitment from investors is important because what will be built is a supporting ecosystem so that the domestic electric vehicle industry can compete in the global arena.

“Indeed, we hope that our industry will not only be marketed to the domestic market segment but also be accepted by the global market. So we must ensure that the quality of the electric vehicles we make is good and has an adequate supporting ecosystem, “


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The long-term commitment of this investor includes the research and development capabilities of the investor. This research and development capability is essential to establish an ecosystem as a whole, not just an increase in production.

“I try to think in line with the current government’s agenda which is paying attention to batteries. We need to speak more about the second-life battery. The batteries whose capacity is in the range of 80% may no longer be optimal for use in electric cars/motorbikes, but these batteries can still be used for other fields such as rooftop solar power plants or wind turbines. “

What does it mean? We can integrate electric vehicles and renewable energy into one ecosystem, which is cleaner and economically profitable. Meanwhile, conventional vehicles can not have the reuse opportunity. 

“In conventional vehicles, the result of burning fuel is in the form of pollution. We can do nothing. It is different from electric vehicles whose batteries can be used again for other purposes, ”explained Alief.

Yet, the existing policies and the way the government sees electric vehicles as a separate component, as well as the circular economy aspect, has not been much considered.

“Until now, it has only been said that if we use a lot of electric vehicles, our fuel imports will decrease. Yes, it is true, but there are far greater things that we can achieve if we seriously develop this electric vehicle ecosystem, “concluded Alief.

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