The Rapidly Growing Indonesia EV Landscape

In April, Indonesia signed more than 25 agreements at the Hannover Messe 2023 trade fair. The first Southeast Asia country to participate as an Official Partner Country, Indonesia presented more than 150 exhibiting organizations at the event, with the aim to promote its “Making Indonesia 4.0” initiative and attract global investments to the country.

Yes, Indonesia’s ambition has grown these few years. Especially for the electric vehicle (EV) market, Indonesia has big plans for it. Here’s how:

Driving the Growth of Domestic EV Industries

According to a recent US Geological survey, most of the world’s supply for nickel is produced in the Southeast Asia and Australia regions. Indonesia is the world’s top nickel producer and has the largest nickel reserves in the world (tied in first place with Australia).

In 2020, Indonesia took the world by surprise with the ban of export of unprocessed nickel. Nickel is an increasingly important material for making nickel rich cathodes for lithium-ion batteries. Other unprocessed metals such as aluminum, would be banned for export starting in June this year.

With this nationalism move, Indonesia hopes to lure more foreign investments into the country and promote the growth of the domestic downstream processing industries, and eventually, the domestic EV manufacturing capabilities (such as batteries) in Indonesia. In 2022, the amount of nickel produced by Indonesia increased by 54% (compared to 2021), accounting for nearly half of the world’s supply and leading the world production by a wide margin.

For now, the strategy has seen some success in attracting investments from foreign companies to secure a price competitive nickel supply. South Korean companies LG Chem and Hyundai are among the early movers and have been involved in Indonesia’s EV plans as early as in 2020. Automaker Ford plans to partner with China’s Huayou Cobalt and Brazilian miner Vale to ensure it has access to Indonesia’s nickel supply.  

At Hannover Messe 2023, Indonesia continued to lobby for more investments. Prior to the event, BASF and Eramet were said to be finalizing a $2.6 billion partnership to invest in a nickel smelting facility, while Volkswagen plan to join the partnership with Ford, Vale, and Zhejiang Huayou Cobalt.

Developing the Domestic EV Charging Infrastructure

To grow the domestic EV landscape, a reliable EV infrastructure, such as the availability of charging stations, would be paramount to accelerate the adoption of EV vehicles. According to data from PT PLN (Persero), there were 267 units of public electric charging stations in 197 locations in 2021, and this grew to 588 units in 257 locations in 2022. While this may not seem much for now, the rate of growth of units by more than 120% in about a year seems promising.

At Hannover, the Memorandum of Understanding (MoU) signed between ABB, ABB E-mobility and PLN Icon Plus, was featured as part of the series of signing events. They will collaborate to grow the EV charging infrastructure in Indonesia by working in several areas such as developing a charging station management system, deployment of EV chargers, as well as marketing efforts. In terms of deployment, ABB E-mobility has already enjoyed some success in Indonesia. In addition to the DC fast chargers such as the ones deployed with Shell Indonesia, ABB E-mobility has also deployed home charging AC wall boxes for residences, shopping malls and car manufacturers.  

More Incentives for EV Vehicles

One of Indonesia’s goals is for EVs to make up at least 20% of its domestic vehicle sales by 2025.

To encourage the adoption of EV vehicles domestically, the government has offered several incentives. Earlier, the government had announced plans to offer more than US$5,000 of subsidies for EV cars. For EV motorbikes, a subsidy of US$450 for consumers was made available more recently for the bikes manufactured with high domestic efforts.

In addition, the government has also offered to reduce the value-added tax (VAT) on EV vehicles significantly, from 11% to a mere 1%, for vehicles made with high domestic efforts, which prompted a jump in sales in April.

Additional information from ARC Advisory Group on EV Charging systems is located at The Coming Whirlwind of Electric Vehicle Charging Systems, Fast Charging, Interoperability, and More

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