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Indonesia Promotes The EV Ideal, But Auto Buyers Exercise Caution

Indonesia Promotes The EV Ideal, But Auto Buyers Exercise Caution
Although purchasers are still not convinced, Indonesia's government used the Jakarta auto show to reaffirm its plans to promote the manufacturing and sales of electric vehicles in Southeast Asia's largest auto market.
Visitors to the car exhibition in Tangerang, on the outskirts of Jakarta, cited the higher price of electric vehicles (EVs), misgivings about new brands, and concerns about the availability of charging stations as reasons to delay for the time being.
Dody Hartono, a show visitor who hopes to purchase his first electric vehicle by 2024, said he wants a better price.
"We have to make people interested first with EVs, starting with prices that should be 60% cheaper," the 54-year old said.
As it chases Thailand and India to develop an EV industry as a rival to China, the world's largest producer, Indonesia has lofty goals for EV growth. However, less than 1% of the vehicles on its roadways are electric vehicles right now.
The government has reduced the value-added tax on electric vehicles from 11% to 1%, which lowers the starting price of the lowest Hyundai Ioniq 5 from over $51,000 in Indonesia to under $45,000.
According to Hartono, a cost of between $10,000 and $13,000 would be more desirable.
There are only two EVs available in that price bracket, the $12,300 Seres Group E1 and the $7,000 Wuling Air EV Lite. The Daihatsu Ayla, Indonesia's most affordable gasoline-powered vehicle, has a starting price of less than $9,000.
Huawei's manufacturing partner for electric vehicles is China's Seres Group.
The BYD Seagull, one of the best-selling EVs in China, has a starting price of just over $10,000, but other companies, including Chinese automakers, find it difficult to compete on price in export markets.
Thailand's starting price for BYD's ATTO 3, the best-selling EV in Southeast Asia during the first quarter, is slightly over $31,000.
The price premium in Indonesia needs to be cut, according to Hendra Pratama, 42, a client looking to buy an EV at the auto show.
"It's not affordable," he said.
The top three automakers in Indonesia by sales are Toyota, Daihatsu, and Honda, but they have been hesitant to switch to EVs.
Price was not a concern for 44-year-old Hendra Budi, but he wanted more assurance in the quality of the brands being offered.
"If Toyota or Honda launched a full EV, we will be interested," he said.
Toyota has stated that it has no current intentions to produce EVs in Indonesia.
At the car show, which ended on Sunday, Indonesia's industry ministry made the announcement that it would give automakers an additional two years to meet the requirements for production incentives.
Following the announcement, the Chinese Neta EV brand and the Japanese Mitsubishi Motors both committed to investing.
By 2030, Indonesia wants to produce 600,000 electric vehicles. More than 100 times as many would have been sold in Indonesia in the first half of 2023.
The chief economic minister of Indonesia expressed his expectation that more cars than the 26,000 that were sold at the auto show last year would be sold at the Jakarta auto show.
As of Monday, the total number of vehicles sold, including the percentage of EVs, was unavailable.

Christopher J. Mitchell

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