Indonesia: BYD, MG, Great Wall, Chery and VinFast entering EV market
Tax incentives to continue, utilizing nickel to build EV ecosystem
2024/04/12
- Summary
- Electrification policy: Tax incentives for EVs to continue in 2024
- EV sales in Indonesia: 2023 sales increase 40% to 17,000 units
- Utilizing nickel ore to make Indonesia EV battery production hub
- Mitsubishi, Hyundai to increase production capacity, Citroen, BYD, Neta to start local manufacturing
- 2023 sales in Indonesia decline 4% to 1.01 million, CBU exports grow 7% to 510k
- Domestic market: Japanese OEMs launching several HV/PHV models
- Production Forecast by GlobalData: Indonesian production expected to be 1.57 million units in 2027
Summary
The Indonesian government is aiming to achieve carbon neutrality by 2060. To this end, the government has emphasized electrification of the transportation sector and aims to produce over 400,000 units of four-wheeled electric vehicles (EVs) by 2025 and over 600,000 units by 2030.
To promote EVs, the government intends to continue its tax incentives that began in 2023. The tax reduction and exemption for value-added tax and luxury sales tax will continue until the end of 2024, while import tariff exemption will last until the end of 2025. Purchase subsidies for electric motorcycles with the Domestic Component Level (TKDN) of over 40% will also be provided in 2024 until the budget is used up.
Sales of EVs in Indonesia totaled 10,327 units from seven OEMs in 2022 while, in 2023, 14 OEMs delivered 17,057 EVs. Around 80% of these EVs were sold by Hyundai Motor and Wuling. In 2024, Chinese carmakers including BYD, MG, Great Wall and Chery Automobile as well as Vietnamese automaker VinFast will enter the EV market in Indonesia.
In addition to an EV manufacturing hub, Indonesia is also aiming to be a production hub for EV batteries by utilizing nickel ore natural resources in the country. State-owned enterprises, automobile manufacturers, and battery companies are cooperating to build a supply chain for EVs and automotive batteries including the mining and refining of nickel ore, producing precursors and cathode materials, and battery recycling.
Regarding activities related to vehicle production, some OEMs are increasing their production capacities for EVs. Mitsubishi Motors will raise the annual production capacity of its Indonesian plant where it has started building the L100 EV electric mini commercial van from 220,000 units to 250,000 units in 2024. Hyundai Motor plans to increase its annual production capacity for EVs to 70,000 units. Stellantis Group’s Citroen, BYD and Neta will start local production of EVs.
According to statistics from the Association of Indonesia Automotive Industries (GAIKINDO), 2023 production declined by 5.1% year-over-year (y/y) to 1.396 million units and sales fell by 4.0% y/y to 1.006 million units, while exports of completely built units (CBU) increased by 6.7% y/y to 505,000 units.
As for the new model launches in 2023-2024 except for EV models, Japanese OEMs are releasing several PHV and HV models. Toyota has introduced the RAV4 GR Sport PHV and the HV version of the new Vellfire. Honda has launched the new Accord RS e:HEV and the CR-V which offers the HV version.
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| Wuling Air EV Lite (Air EV’s lower-priced version launched in August 2023) (Photo: Wuling) | Indonesia's vehicle production, sales and exports (Source: Created by MarkLines based on GAIKINDO's data) |
Related reports:
ASEAN Vehicle Sales and Production Update (Q4 2023) (Feb. 2024)
ASEAN (2): Production and sales recovering to pre-pandemic levels (Aug. 2023)
ASEAN (1): Accelerating shift to EVs, and market entry of Chinese OEMs (Aug. 2023)
Indonesia: Utilizing Nickel to Build EV Supply Chain (Jan. 2023)
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