Electric Two-Wheelers in Indonesia

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Out of the 125 million motorcycles in use in Indonesia as at the end of 2022, only 32,000 are electric, according to Statista. The Indonesian government intends to change that with a US$455 million subsidy to encourage the manufacture of 800,000 new electric two-wheelers and the conversion of 200,000 petrol-powered scooters to electric. Will it be too little too late? Or will it be seed money that stimulates the market and leads to even greater numbers of electric two-wheelers in Indonesia? Time will tell.

In a recent article, we quoted Rethink Energy as saying that growth in the Indonesian electric 2-wheeler (e2W) market will contribute significantly to the global goal of reaching 100 million e2Ws by 2027. Considering that Indonesia alone accounts for 125 million fossil-fueled 2Ws, even after the target of 100 million is reached, there will still be a long way to go.

Indonesia is a country consisting of 17,000 islands and a population of 280 million. It is the most populous Muslim-majority country in the world. Its urban areas are densely populated, leading to the use of motorcycles as the preferred mode of transport. Two-wheelers provide the most efficient, affordable, and flexible door-to-door mobility option. They also create a great deal of the pollution experienced by residents. Hence the need for e2Ws in Indonesia.

Statista tells us: “Indonesia produces and assembles most of the motorcycles sold domestically and exports some to other Asian countries and around the world. All of this allowed the Indonesian motorcycle market to grow to a total market revenue of about 6.03 billion U.S. dollars in 2022.”

Over five million new 2-wheelers were sold in 2022 in Indonesia. Scooters with an engine capacity of 125 cc are the most popular. They are cheap and good for short trips at low or medium speed. Indonesia manufactures enough two-wheelers for domestic use and for export to the Philippines, Vietnam, and Thailand.

Japanese brands such as Honda, Yamaha, and Suzuki dominate the Indonesian market, with production in local factories. Honda, in a joint venture with PT Astra, has a 73.8% market share. It is the sole agency for the production, assembly, and distribution of Honda motorcycles in Indonesia. Its flagship models are the Honda Beat and the Honda Vario. In 2022, the company generated a net revenue of about 3.96 trillion Indonesian rupiah (about US$270 million).

Astra Honda plans to develop seven electric models by 2030. These will be in high demand, as Indonesian ride-hailing leader Gojek plans to convert its entire fleet to electric by 2030. Gojek claims to have 2 million driver partners, and growing. It wants all its driver partners riding electric two-wheelers in Indonesia.

In an effort to accelerate the transition to EVs, the Indonesian government has announced subsidies for the purchase of new e2W and the conversion of existing petrol models. It is expected that this will encourage investment in local industry to produce batteries, produce e2W, and push mass adoption of electric vehicles.

The International Council on Clean Transport (ICCT) gives us more detail: “In December 2022, Indonesia’s Minister of Industry, Agus Gumiwang, announced the government’s plan to provide purchase subsidies for electric cars, hybrid cars, and electric motorbikes, and to subsidize the cost of converting combustion-engine motorbikes to electric. Under the scheme, a subsidy of IDR 80,000,000 (~US$ 5,130) will be given for purchasing a new battery-electric vehicle and half that amount for purchasing a conventional hybrid. New electric motorbikes will receive a purchase subsidy of IDR 8,000,000 (~US$ 520), and the government will pay IDR 5,000,000 (~US$ 320) for converting an ICE two-wheeler to an electric two-wheeler.”

“We are launching this programme so that the massive adoption of battery electric vehicles can be achieved soon, and the Indonesian transportation industry can be transformed to a greener industry,” senior Indonesian cabinet minister Luhut Pandjaitan said at the March 2023 news conference. Vehicles eligible for the subsidy have to meet minimum local content requirements, he said. The government hopes that adding 1 million e2Ws by 2024, and a further million by 2025, it will help develop EV production facilities to take advantage of the country’s rich nickel reserves for battery production and reduce fossil fuel consumption. Hopefully Tesla can also be a part of the battery landscape in Indonesia and help expand the EV fleet.

The Indonesian government looked at approaches taken by other countries, particularly China. As well as private EVs, Indonesian President Joko Widodo recently announced subsidies for electric public transport vehicles that are produced domestically or meet minimum local content requirements. Exact figures for bus subsidies are yet to be made public.

Government-led initiatives to jumpstart the adoption of electric vehicles is expected to lead to an increase in investment in nickel processing and battery manufacture. Indonesia Battery Corporation (IBC) is targeting a local market share of up to 30% for electric motorbikes. IBC last year acquired majority stakes in PT Wika Industri Manufaktur and producer of electric scooters Gesits, which currently has a production capacity of 40,000 units per year. Gesits is targeting a production capacity of 100,000 e2Ws in the next few years.

Government incentives were introduced “in China 10 years ago. Now their (annual) electric motorbike sales have reached more than 30 million,” IBC chief executive Toto Nugroho told Reuters.

Battery manufacturers are already setting up shop in Indonesia. LG started construction of its US$1.1 billion/10 gigawatt-hour plant, is at 70% completion, and should be starting production next year. IBC is a local partner for South Korea’s LG and China’s CATL. LG expects to produce enough batteries to power approximately 200,000 electric cars or up to 2.5 million e2Ws in Indonesia. IBC would also assemble its own battery packs, which could help lower the price of its electric bikes by around 15%, Toto said.

GESITS (Garansindo Electric Scooter ITS) is now majority owned by IBC and is expected to dominate the e2W market. “GESITS was born from a dream to create an environmentally friendly and modern transportation tool that was made by an Indonesian company…. The Gesits Scooter is powered by a 5 KW electric motor, has a lithium ion battery of 50 volts and 40 AH to support a range of 100 kilometers on a single charge. It only takes 90 minutes to fully charge the battery.” The scooter features regenerative braking and connects to Android smartphones. Users can monitor speed, temperature, battery condition, distance travelled, and voltage through their phones.

Electric scooters are good value for money for both business and personal use. “Although electric vehicles like GESITS are more expensive to produce, they have significantly lower running costs. The cost is about US $0.11 per kWh, so you spend just US$ 0.57 when riding Gesits for 100 kilometres.” There are good savings on both fuel and maintenance. Will Gesits be Indonesia’s VinFast?

Otto.com lists 47 electric two-wheelers available in Indonesia. These range in style from scooters to motorbikes, and even a Harley-Davidson LiveWire (launching later this year). They include the Alva CERVO, Yamaha E01, Alva One, Segway E Series, and Yadea Sparta. The cheapest electric bike is the Selis Mandalika 2023, priced at Rp 4.8 million (US$340) — it looks a little like a child’s electric scooter — and the most expensive one is the Alva CERVO 2023 for Rp 37.75 million (US$2500), which looks like a full size motorcycle. The Gesit sits in the middle with a price tag of Rp 28.7 million (about US$1700). So, in my opinion, a $520 subsidy should help in e2W uptake.

What is the cost of a petrol-powered motorbike or scooter? A quick search seems to indicate similar prices to electric. Am I missing something here?

A rapid transition to e2Ws in Indonesia is made more likely by government incentives. If they reach the target of 1 million e2Ws in 2023, that will equate to 20% market share. However, similar issues exist here as they do in Vietnam — access the charging, greening the grid, and public acceptance of new technology. Can they overcome the challenges? I hope so. I’m looking forward to good news over the next 24 months and the Indonesian government receiving a grade of “Exceeds Expectations.”