Indonesia set to lead the electric vehicle revolution

electric car

An electric car at a charging station. 

Photo credit: Pool

Few countries take the threat of climate change as seriously as Indonesia. President Jokowi’s recent trip to Africa highlighted exactly this. Among the top issues on the agenda were encouraging economic cooperation, development issues and addressing common concerns, among which climate issues rank high.

The fourth most populous country on the planet, our island nation sits on over 94 million hectares of forest spread across 6,000 inhabited islands. Indonesia's geography is a source of both significant strength and indeed risk.

The country is blessed with a bounty of natural resources that support vital biodiversity. However, it is also acutely vulnerable to the effects of climate-related disasters. A significant proportion of Indonesia's 274 million people live in densely populated areas that are particularly susceptible to the effects of climate change, from its low-lying coastlines to lush forest canopies. Indeed, joint strategies for disaster management also ranked high on the agenda of President Jokowi’s first meeting of his trip with Kenyan President William Ruto.

For Indonesia, our own susceptibility to climate-related disasters forces us to be at the forefront of the global energy transition to sustainable energy.

As a nation, the government has set the ambitious goal of reducing our greenhouse gas emissions by 41 per cent with international assistance by 2030 (or by 29 per cent independently) and of achieving net-zero carbon emissions by 2060. These targets, signifying a real dedication to combatting climate change, require significant participation from the private sector if they are to be met.

Indika Energy Group

As President Director of the Indika Energy Group, one of Indonesia's most diverse holding companies, I have pledged that our company will achieve net-zero emissions by 2050.

With coal currently making up 60 per cent of Indonesia’s energy mix, a net-zero goal is not without consequence. We are taking proactive steps to sell and divest from our coal mines and instead invest in scalable renewable energy solutions. A significant part of how we and the country intend to meet these goals is by scaling up our electric vehicle (EV) sector. Indonesia possesses incredibly vast nickel reserves, a crucial component in lithium-ion batteries, and a skilled labour supply that can facilitate the growth of EV production.

As of the end of 2022, we have already seen progress in EV adoption in Indonesia, with a fivefold increase in the number of electric cars and motorbikes sold over 2021. By 2030, Indonesia intends to have 13 million electric two-wheelers and 2 million electric cars on the roads.

The potential of an expanded EV sector extends beyond environmental benefits—it also presents an opportunity to bolster the economy and generate millions of high-skilled jobs for Indonesian workers. Leading international companies have taken note of Indonesia's market potential, with EV sales projected to reach $1.6 trillion. Hyundai, for example, recently built the first-ever EV factory in Southeast Asia in Java, and LG is in the process of building a large battery plant in Indonesia.

Shape the ecosystem

Our own Indika Energy is also playing a key role in Indonesia’s pivot towards EVs, with our own ALVA One and ALVA Cervo two wheelers, produced through a joint-venture by our subsidiary PT Electra Mobilitas Indonesia (EMI). Over the long term, we hope to grow beyond EVs and shape the ecosystem that they depend on: from production to battery charging stations and battery swap facilities to recycling services.

This requires private public sector partnerships and a truly long-term vision, investing in generational infrastructure which demonstrate a commitment to a whole new world of green mobility.

The ecosystem we are trying to create therefore requires a lot of funding, with the market growth presenting its own challenges too.

Fortunately, the government's support through regulations and incentives for promoting EV adoption offers encouraging prospects; but we cannot achieve this alone. Indonesia – a true bridge between East and West, is poised to become a global leader in the EV revolution, and we believe that hand-in-hand with our international partners, and in cooperation with our new friends in Africa, we will get there.

Mr Rasjid chairs the Indonesian Chamber of Commerce and Industry and the ASEAN Business Advisory Council. He is the President Director of Indika Energy.