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Indonesian electric vehicle agenda plagued by consumer concerns
Jakarta Post, 6 December '19Headlines 6 December '19
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The Indonesian government's ambitious target in developing the country's electric vehicle (EV) manufacturing programme is facing problems related to demand such as prices, battery charging, maintenance, performance and variety of models.
"The problems are making it difficult for the EV industry to grow," Association of Indonesian Automotive Manufacturers (Gaikindo) secretary-general Kukuh Kumara said during a seminar on the preparations of the Indonesian automotive industry in entering the Industry 4.0 era.
He said prices remained a major problem for Indonesian consumers, whose purchasing power was still relatively smaller than those in developed countries.
The purchasing capacity of most middle-income Indonesians to buy a car was only about IDR 300 million (about US$ 21,400), far lower than the price of a midsize electric car, which reached about IDR 800 million, he added.
Speaking at the same event, Danareksa Research Institute chief economist Moekti Prasetiani Soejachmoen, whose PhD dissertation was on the automotive industry, said a recent consumer survey disclosed seven concerns about the use of EVs.
Running-out of power was the highest of the seven concerns, followed by low availability of charging stations, vehicle prices, maintenance costs, lack of variety in models, inadequate performance and risks of an overwhelmed electricity grid, she said, quoting the survey conducted by Pertamina Energy Institute.
Of the surveyed respondents, about 30% of EV users doubted whether a fully charged EV could last their entire trip.
In terms of power, the battery electric vehicle (BEV) Nissan Leaf, for example, has a 243 km driving range on a fully charged 40 kilowatt hour (kWh) battery, while Tesla Model 3 has a 354 km driving range with a 50 kWh battery.
Under the leadership of President Joko "Jokowi" Widodo, the government has set an ambitious target in developing EVs. It expects the local automotive industry to begin domestic EV production by 2021 or 2022 to reach the target of exporting 200,000 electric cars by 2025, around 20% of the expected total of 1 million car exports in the year.
Jokowi has issued a presidential regulation that regulates and incentivizes the EV industry to spur its growth, although it still lacks supporting regulations from other ministries before the cars can hit the road.
According to state electricity firm PLN's vice president for technology development and standardization, Zainal Arifin, Jakarta has charging stations for EVs at PLN's headquarters in South Jakarta, at the company's central distribution unit in Central Jakarta and at Senayan City shopping mall in South Jakarta.
Tangerang in Banten, Bandung in West Java and Denpasar in Bali have one station each.
PLN also provides 3,000 charging units for electric motorbikes across the country. He said a challenge lied in deciding on the power rates for charging stations. Existing stations charged a rate of between IDR 1,400 and IDR 1,600 per kWh.
According to Arifin, EVs offer a more competitive marginal cost than internal combustion engine vehicles, as the former were two to four times more efficient than the latter.
Power consumption of an electric bus, for example, costs about IDR 54,698 for a 39 km trip, with the assumption that energy consumption is 33.15-kWh and the electricity rate is IDR 1,650 per kWh.
Meanwhile, the fuel consumption of a diesel bus costs almost twice that, at IDR 100,425 for the same distance, with an assumption that the bus uses 1 litre of diesel per two km and the diesel costs IDR 5,150 per litre.
About 40% of survey respondents were concerned about the price of EVs and about 30% were concerned about costs related to maintenance. For a midsize American car, the battery accounted for about 30% of an EVs' retail price in 2018 and 2019, according to Bloomberg New Energy Finance. However, by 2025, the battery will only account for 20% of the total vehicle cost.
"A cheaper battery would lower the retail price of EVs and in turn would increase demand, as customers are concerned about costs," Soedjahmoen told a daily.
As 41% of car owners are considering buying EVs as their next vehicles, the EV market has potential to grow, according to Nissan Motor Indonesia president director Isao Sekiguchi, quoting research.
"The problems are making it difficult for the EV industry to grow," Association of Indonesian Automotive Manufacturers (Gaikindo) secretary-general Kukuh Kumara said during a seminar on the preparations of the Indonesian automotive industry in entering the Industry 4.0 era.
He said prices remained a major problem for Indonesian consumers, whose purchasing power was still relatively smaller than those in developed countries.
The purchasing capacity of most middle-income Indonesians to buy a car was only about IDR 300 million (about US$ 21,400), far lower than the price of a midsize electric car, which reached about IDR 800 million, he added.
Speaking at the same event, Danareksa Research Institute chief economist Moekti Prasetiani Soejachmoen, whose PhD dissertation was on the automotive industry, said a recent consumer survey disclosed seven concerns about the use of EVs.
Running-out of power was the highest of the seven concerns, followed by low availability of charging stations, vehicle prices, maintenance costs, lack of variety in models, inadequate performance and risks of an overwhelmed electricity grid, she said, quoting the survey conducted by Pertamina Energy Institute.
Of the surveyed respondents, about 30% of EV users doubted whether a fully charged EV could last their entire trip.
In terms of power, the battery electric vehicle (BEV) Nissan Leaf, for example, has a 243 km driving range on a fully charged 40 kilowatt hour (kWh) battery, while Tesla Model 3 has a 354 km driving range with a 50 kWh battery.
Under the leadership of President Joko "Jokowi" Widodo, the government has set an ambitious target in developing EVs. It expects the local automotive industry to begin domestic EV production by 2021 or 2022 to reach the target of exporting 200,000 electric cars by 2025, around 20% of the expected total of 1 million car exports in the year.
Jokowi has issued a presidential regulation that regulates and incentivizes the EV industry to spur its growth, although it still lacks supporting regulations from other ministries before the cars can hit the road.
According to state electricity firm PLN's vice president for technology development and standardization, Zainal Arifin, Jakarta has charging stations for EVs at PLN's headquarters in South Jakarta, at the company's central distribution unit in Central Jakarta and at Senayan City shopping mall in South Jakarta.
Tangerang in Banten, Bandung in West Java and Denpasar in Bali have one station each.
PLN also provides 3,000 charging units for electric motorbikes across the country. He said a challenge lied in deciding on the power rates for charging stations. Existing stations charged a rate of between IDR 1,400 and IDR 1,600 per kWh.
According to Arifin, EVs offer a more competitive marginal cost than internal combustion engine vehicles, as the former were two to four times more efficient than the latter.
Power consumption of an electric bus, for example, costs about IDR 54,698 for a 39 km trip, with the assumption that energy consumption is 33.15-kWh and the electricity rate is IDR 1,650 per kWh.
Meanwhile, the fuel consumption of a diesel bus costs almost twice that, at IDR 100,425 for the same distance, with an assumption that the bus uses 1 litre of diesel per two km and the diesel costs IDR 5,150 per litre.
About 40% of survey respondents were concerned about the price of EVs and about 30% were concerned about costs related to maintenance. For a midsize American car, the battery accounted for about 30% of an EVs' retail price in 2018 and 2019, according to Bloomberg New Energy Finance. However, by 2025, the battery will only account for 20% of the total vehicle cost.
"A cheaper battery would lower the retail price of EVs and in turn would increase demand, as customers are concerned about costs," Soedjahmoen told a daily.
As 41% of car owners are considering buying EVs as their next vehicles, the EV market has potential to grow, according to Nissan Motor Indonesia president director Isao Sekiguchi, quoting research.