While the outdated internal combustion engine (ICE) still has a stronghold on the country, EV adoption is set to escalate: report

A recent report by the Electric Mobility Ecosystem Association (AEML) of Indonesia has estimated the total addressable market for Electric Vehicles (EVs) to surpass US$20bn, despite minimal adoption to date.

While the EV market is still nascent in the country, analysts there have explored various aspects of major EV industry players; technology/infrastructure development; localized production; market dynamics; public sentiment; industry and supply chain dynamics; policy and regulation and investment climate dynamics that favor the development of an “EV economy” in ASEAN’s single largest market.

Additionally, Indonesia has set ambitious goals for switching to clean energy, intending to augment the proportion of renewables to 23% of the country’s energy composition by 2025 (up from 9% in mid-2020). The country envisions a broader nationwide energy transition to be completed by 2056 under the obligations of the Paris Agreement. EVs are expected to substantially reduce the nation’s energy imports, which currently total US$35bn per annum.

Given that EVs promise 75% greater efficiency and significantly lower operating costs for businesses — if public and private stakeholders collaborate effectively to nurture a conducive local EV sector, the market would grow at a compound annual growth rate of 58.5% until 2030. Currently, EV motorbikes account for 0.2% of Indonesia’s two-wheeler market. However, the report suggests an opportunity for this to exceed 10% over the next five years.

According to AEML General Chairman Dannif Utojo Danusaputro: “Our mission of electrifying mobility in Indonesia is based on a calling to protect the environment by reducing pollution for future generations.”

The report was produced with support from AC Ventures, whose managing partner Helen Wong noted: “The current surge and trajectory in electric two-wheelers speak to the market’s clear demand and potential for remarkable returns” in the process of exceeding Indonesia’s renewable energy targets and  “promising a future of reduced emissions and enhanced sustainability.”

The sector has already ushered in global automotive giants such as Hyundai, Honda, Toyota, Mitsubishi, Wuling, and others.