JAKARTA: While still nascent, Indonesia’s electric vehicle (EV) sector shows a total addressable market exceeding USD$20 billion, according to a report by Southeast Asian venture capital firm AC Ventures (ACV) and non-profit organisation AEML.
The report, titled “Indonesia’s Electric Vehicle Outlook: Supercharging Tomorrow’s Mobility,” noted that Indonesia has set ambitious renewable energy goals, intending to augment the proportion of renewables to 23% of the country’s energy composition by 2025.
This marks a significant rise from the 9% established in mid-2020, and Indonesia envisions a broader nationwide energy transition to be completed by 2056.
These initiatives are consistent with Indonesia’s obligations under the Paris Agreement to decrease emissions by 29% by 2030 and to attain a net-zero emissions target by 2060 or
earlier.
The report by ACV and AEML showcases a coalition of vital factors setting the stage for exponential growth in the nation’s EV market.
These include a surge in consumer demand, supportive government policies, and advancements in technology that enhance performance while reducing production and ownership costs.
The report pointed out that EVs in Indonesia promise 75% greater efficiency and significantly lower operating costs for businesses, thus offering the potential for the country’s electric mobility market to grow at a remarkable CAGR (compound annual growth rate) of 58.5% until 2030.
Further, EVs also have the capacity to substantially reduce the nation’s energy imports, which currently total USD$35 billion annually.
Currently, EV motorbikes account for a mere 0.2% of Indonesia’s two-wheeler market.
However, the report suggests an opportunity for this to exceed 10% over the next five years, assuming that public and private stakeholders collaborate effectively to nurture a conducive local EV sector.
Encouragingly, considerable capital and resource investments are already in progress, noted the report.
Local brands and venture investors are actively forging deals and strategic partnerships, and the sector has already ushered in global automotive giants such as Hyundai, Honda, Toyota, Mitsubishi and Wuling.
AC Ventures managing partner Helen Wong explained, “The current surge and trajectory in electric two-wheelers speak to the market’s clear demand and potential for remarkable returns. As a pioneering investment firm in this sector, we’re committed to fostering strategic collaborations to exceed Indonesia’s renewable energy targets, promising a future of reduced emissions and enhanced sustainability.”
AEML general chairman Dannif Utojo Danusaputro added, “We partner with the government of Indonesia, international organizations, key actors in the EV ecosystem, as well as other associations, to reach out to more people and promote a positive campaign for EVs. Our mission of electrifying mobility in Indonesia is based on a calling to protect the environment by reducing pollution for future generations. AEML is committed to supporting the adoption of EVs and fostering the creation of a globally competitive EV ecosystem.”
Keyword: Indonesia’s addressable market for EVs exceeds USD$20bil