As Indonesia pushes EV dream, car shoppers stay cautious

Wuling Motors Holdings

21/08/2023 05:54

By Johan Purnomo and Stefanno Sulaiman
       TANGERANG, Indonesia, Aug 21 (Reuters) - Indonesia's
government used the Jakarta auto show to double down on plans to
drive production and sales of electric vehicles in Southeast
Asia's largest auto market, but buyers are not sold yet.
    The price premium on electric vehicles (EVs), questions
about the availability of charging stations and doubts about new
brands are reasons to hold back for now, said visitors to the
auto show in Tangerang, on the outskirts of Jakarta.
    Dody Hartono, a visitor at the auto show who plans to buy
his first EV by 2024, said he wants a better deal. 
    "We have to make people interested first with EVs, starting
with prices that should be 60% cheaper," the 54-year old said.
    Indonesia has ambitious EV growth plans as it races Thailand
and India to build out an EV industry as an alternative to
China, the world's largest producer. However, EVs currently
account for less than 1% of cars on its roads. 
    The government has slashed the value-added tax on EVs to 1%
from 11%, bringing the starting price of the cheapest Hyundai
Ioniq 5 to under $45,000 from over $51,000 in Indonesia. 
    Hartono said a price between $10,000 and $13,000 would be
more appealing.
    There are only two EVs on offer near that range, Wuling's
 0305.HK  Air EV Lite and Seres Group's E1  601127.SS  at around
$12,300. The cheapest gasoline-powered car in Indonesia, the
Daihatsu Ayla, starts under $9,000.
    China's Seres Group is the EV manufacturing partner of
technology company Huawei  HWT.UL .
    By comparison, one of the best-selling EVs in China, the BYD
Seagull  002594.SZ , starts at just over $10,000, but other
companies - and even China's own automakers - struggle to match
that kind of pricing in export markets.
    BYD's ATTO 3, the best-selling EV in Southeast Asia in the
first quarter, starts in Thailand at just over $31,000.
    Hendra Pratama, 42, a customer shopping for an EV at the
auto show said the price premium in Indonesia needed to be
reduced to attract lower-middle income consumers.
    "It's not affordable," he said. 
    
    CONFIDENCE ISSUES
    Toyota  7203.T , its affiliate Daihatsu, and Honda  7267.T  
account for two-thirds of auto sales in Indonesia but have been
slow to pivot to EVs.
    Hendra Budi, 44, said price was not an issue for him but he
wanted to have more confidence in the brands on offer.
    "If Toyota or Honda launched a full EV, we will be
interested," he said.
    Toyota has said it has no plans yet to build an EV in
Indonesia. 
    Indonesia's industry ministry announced at the auto show,
which concluded on Sunday, that it would offer automakers two
more years to qualify for production incentives. 
    The announcement was followed by investment commitments from
China's Neta EV brand and Japan's Mitsubishi Motors  7211.T .
    Indonesia has set a target of producing some 600,000 EVs by
2030. That would be more than 100 times the number sold in
Indonesia in the first half of 2023.
    Indonesia's chief economic minister said he hoped the
Jakarta auto show would drive sales of more than 26,000
vehicles, the number sold at the auto show last year. 
    The final number of cars sold – and the share of EVs in that
– was not available as of Monday. 
 ($1 = 15,280.0000 rupiah)

 (Reporting by Johan Purnomo; Writing by Stefanno Sulaiman;
Editing by Kevin Krolicki and Himani Sarkar)
 ((Stefanno.Sulaiman@thomsonreuters.com;))