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Indonesia’s Electric Vehicle Ambitions Gets a Boost

Image credit: www.gojek.com/en-id/

An Indonesian ride-hailing tech company has announced plans to make every car and motorcycle on its platform an electric vehicle (EV) by 2030 in an ambitious three-pronged sustainability strategy.

Dubbed the “Three Zeros” agenda, the company aims to reach zero emissions, zero waste and zero socio-economic barriers by the end of the decade. The plans will see the 11-year-old company invest in a series of EV pilot programmes across Southeast Asia, as well as launching a “world-first” in-app carbon offsetting feature. However, the tech company said the plans would also require external support, highlighting the need for public and private collaboration to build the supporting infrastructure.

The tech company has seen strong interest from battery manufacturers, nickel providers and Indonesian authorities keen to assist with the shift to green energy in the world’s fourth most populous country and the surrounding region. Indonesia is one of the largest motorcycle-based transportation countries, so there is a lot of interest around this from a range of parties; the tech company sees itself as a primary facilitator in making this happen.

In addition, the company announced a series of social mobility initiatives, including establishing an employee-led council to push corporate diversity, equality and inclusion programmes as well as helping micro and small businesses digitise. It also pledged to only partake in gender diverse panels for speaking events.

As reported by OpenGov Asia, Indonesia plans to roll out new regulations that offer tax breaks for hybrid EVs, in the latest effort to promote the development of electric vehicles in the country. In a meeting with Parliament, Indonesian Finance Minister Sri Mulyani said that investors who build electric cars in Indonesia feel that the current framework is unfair as there is no difference in the tax rates between hybrid and fully electric cars.

While battery-powered EVs continue to be exempted from the luxury tax, the plug-in hybrid EV will see an increase to 5% from 0%. Full and mild hybrid types will be taxed at a rate of 6% to 12%, from a previous range of 2% to 12%. Also, the government will provide tax holiday incentives for up to 10 years if EV manufacturers make at least a USD 346.2 million investment in the country.

President Joko Widodo has expressed his interest in making Indonesia a top player in the global electric car market, especially given that the country is the world’s largest producer of nickel, an essential component to produce lithium-ion (Li-ion) batteries that power electric vehicles.  Indonesia aims to be a regional EV hub in 2030 and it has been rolling out various initiatives to boost its production in the country.

Tech companies have also expressed their commitment to the initiative. An international ride-hailing giant put over 5,000 electric cars, motorcycles, bicycles, and scooters across Indonesia. Meanwhile, another tech unicorn is planning to test electric motorcycles this year and is working with the state-owned gas and oil company for the commercial pilot in Greater Jakarta.

However, it will not be easy to make consumers switch on a large scale due to its high price, said the association of Indonesian automotive industries. Most consumers are buying cars at prices between USD 10,386 to USD 17,310, while electric cars are currently selling for about USD 34,620. According to the Association, there is a huge potential for electric cars, but prices must be lowered significantly so they will be more affordable for the wider communities.

Another challenge is the supporting infrastructure like charging stations. The state electricity company PLN currently only runs 37 stations across the country, although it targets to have 2,400 by 2025. Addressing these two major problems will get consumers more interested.

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