Indonesia's slow transition hampered by electric vehicle challenges

In February 2024, the Indonesia International Motor Show took place in Jakarta, aiming to showcase the future potential of electric vehicles and motorbikes in the country. Despite the enthusiasm of over 50 exhibitors, including international brands like BYD and VinFast, Indonesia has seen a slow uptake of electric vehicles, which account for only 7% of the total vehicle fleet. This slow adoption can be attributed to several barriers, including inadequate infrastructure, high upfront costs, and performance concerns surrounding electric vehicles, as highlighted by a 2023 report from the Institute for Essential Services Reform. Another challenge for the automotive sector is a noticeable decline in vehicle sales, with a nearly 14% drop in 2024, attributed to the automotive industry's overall slowdown in Indonesia. The Indonesian Automotive Manufacturers Association reported a decrease in sales from 1 million units in 2023 to 866,000 units in 2024. Although sales for electric vehicles and motorbikes are on the rise, the infrastructural challenges and market hesitance continue to hinder progress. The Minister of Industry, Agus Gumiwang Kartasasmita, emphasized the need for strategic efforts by all stakeholders to stimulate interest in purchasing vehicles to catalyze growth in the automotive sector. To address these challenges, EV makers like VinFast and BYD are not just introducing electric vehicles but are also investing in local manufacturing plants in Indonesia. This initiative aligns with the Indonesian government's ambition to turn the country into a hub for electric vehicles, utilizing its rich reserves of raw materials critical for battery production. Nonetheless, transitioning to electric vehicles is slow, similar to Indonesia's energy transition, where the renewable energy mix stood at only 14% in 2024 despite significant investments aimed at retiring coal and advancing greener energy initiatives. The Motor Show served as an important platform for generating interest and showcasing new technologies, but the broader context reveals a significant gap that needs addressing to encourage a more rapid progression toward electric mobility in Indonesia. A more robust network of charging stations and lower barriers to entry may help increase adoption rates and ultimately support Indonesia's goal of a sustainable automotive industry, but as of now, the transition remains considerably sluggish.