Jakarta – The Institute for Essential Services Reform (IESR) welcomes the government’s move to provide incentives to encourage the adoption of electric vehicles and grow the domestic electric vehicle industry. According to IESR, this can encourage more sustainable economic growth in Indonesia, and reduce the rate of demand for fuel.
However, to encourage more aggressive adoption of electric vehicles and ensure the effectiveness of incentives, a number of policy reforms are needed. These include reducing fuel subsidies and a policy to phase-out fuel-fueled vehicles, starting from passenger vehicles before 2045, and conventional motorbikes.
Fabby Tumiwa, Executive Director of IESR said, although the policy reform is not a populist policy, it needs to be taken by the government with deep consideration. “The use of electric vehicles is also a strategy to achieve the target of reducing greenhouse gas emissions stipulated in the Nationally Determined Contribution (NDC), with the target of adopting 13 million two-wheeled and three-wheeled electric vehicles and 2 million units of four-wheeled electric vehicles by 2030,” he said.
Tumiwa said, the provision of this incentive is a good first step to increase demand for electric vehicles. With the requirement of 40% Domestic Component Level (TKDN), it can encourage investment on the manufacturing side and supply chain of electric vehicle components. He hopes that this policy can realise the economies of scale in electric vehicle production and encourage competition which can have an impact on reducing the price of electric vehicles so as to boost the adoption of even more electric vehicles.
The conversion incentives to electric motors were expected to build the capacity of conversion technicians and workshops, as well as attract business actors to pursue a larger-scale conversion process, said Tumiwa, adding that according to IESR’s findings, “there are six million units of conventional motors per year that can be converted to electric motors by 2030. For this reason, hundreds of certified conversion workshops and skilled technicians are needed to do this. Supply chain support for batteries, electric motors and other components is very necessary so that conversion costs are more affordable for the public”.
According to IESR analysis in the 2023 Indonesia Electric Vehicle Outlook (IEVO) report, the emissions emitted by electric motorbikes and electric cars are 18% and 25% lower than petrol motorbikes and cars. However, if the development of renewable energy only refers to the 2021-2030 PLN’s electricity procurement plan (RUPTL), then the reduction in emissions from electric motorbikes and electric cars is projected to be insignificant, only around 6% and 8% in 2030. (Hartatik)
Banner photo: Electric car at the Mondial Paris Motor Show 2018. (shutterstock.com)