Indonesia’s electric vehicle (EV) market is ripe for transformation, echoing surges seen in Vietnam, and is set to unlock over $20 billion.
According to the report, Vietnam has witnessed a skyrocketing electric two-wheeler penetration from 1.5% to 9.7% between 2015 and 2021. This rapid growth has been propelled by favorable government policies, heightened consumer awareness regarding environmental sustainability, and advancements in EV technology that have made electric two-wheelers a viable and affordable transportation alternative.
Now, Indonesia stands on the precipice of a similar transformation, teetering on the edge of an EV revolution akin to Vietnam’s.
AC Ventures, a venture capital firm focusing on ASEAN, and the Electric Mobility Ecosystem Association, recently unveiled a report, offering an analysis of Indonesia’s burgeoning EV sector. The report uncovers an EV market in Indonesia with a total addressable market worth tens of billions of dollars, despite minimal adoption so far.
Michael Soerijadji, founder and managing partner of AC Ventures, observed, “With a total addressable market exceeding $20 billion and a confluence of key factors already at play, Indonesia’s EV landscape is ready for significant expansion.”
Indonesia has set ambitious renewable energy targets, aiming to increase the proportion of renewables to 23% of energy mix by 2025, a considerable rise from approximately 9% in mid-2020.
The country envisions a broader nationwide energy transition to be completed by 2056, aligning with its obligations under the Paris Agreement to cut emissions by 29% by 2030 and achieve net-zero by 2060 or earlier.
The report underlines a convergence of key factors priming Indonesia’s EV market for exponential growth. These include a surge in consumer demand, supportive government policies, and technological advancements that enhance performance while reducing production and ownership costs, which are similar conditions to those that enabled the rapid rise of EV adoption in Vietnam.
In Indonesia, EVs promise 75% greater efficiency and notably reduced operating costs for businesses, suggesting the potential for the country’s electric mobility market to grow with a CAGR of 58.5% until 2030. Further, EVs hold the potential to significantly reduce the nation’s energy imports, currently amounting to USD 35 billion annually.
Currently, electric motorbikes account for a meager 0.2% of Indonesia’s two-wheeler market. However, the report suggests an opportunity for this figure to surpass 10% over the next five years, assuming effective collaboration between public and private stakeholders to nurture local EV sector.
Considerable investments of resources and capital are already underway. Local brands and venture investors are forging deals and strategic partnerships, bringing global automotive giants such as Hyundai, Honda, Toyota, Mitsubishi, and Wuling into the industry.