Supporting Development Of Indonesia’s EV Sector

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JAKARTA: A transformative shift toward electrifying the transportation sector in Indonesia has prompted the growth of the electric vehicle (EV) ecosystem, which provides promising business opportunities for both local and overseas investors.

The shift from internal combustion engine (ICE) vehicles to EVs will help in reducing carbon emissions from the transportation sector, which also contribute to Indonesia’s overall net-zero target.

According to a report released by McKinsey, Asia Pacific is responsible for 50% of annual global greenhouse gas (GHG) emissions and represents the biggest opportunities, with a potential US$4 trillion to US$5 trillion by 2030 across 11 sectors.

Of the 11 sectors, transportation ranks top with an estimated US$1.1 trillion, followed by power with US$800bil and construction with US$570bil.

Alongside global sustainability initiatives, Indonesia’s growing trend in switching to green transportation is also affirmed by the government’s commitment to achieving its net-zero emissions (NZE) target.

Indonesia’s NZE Road Map for the Energy Sector 2060 mandates that the transportation sector emission levels in 2060 should not exceed 52 million tonnes of carbon dioxide, according to the Energy and Mineral Resources ministry.

As the biggest economy in Asean, natural resources-rich Indonesia with a population of approximately 270 million is home to more than 125 million motorcycles and more than 17 million cars.

President Joko “Jokowi” Widodo said at the final series of programmes at the Asean Summit 2023 that Asean agreed to build an EV ecosystem and serve as a key part of the global supply chain, and therefore, developing a downstream industry is of paramount importance.

Indonesia’s ambition to develop an EV hub is strongly backed up by the country’s abundance in natural resources, particularly nickel, a critical resource for EV batteries.

This explains why many companies, including transportation-related manufacturers, are embedding sustainability into their strategy to support an eco-friendly transportation sector.

Dannif Danusaputro, chairman of the Electric Mobility Ecosystem Association (AEML) revealed that the switch to EVs from ICE vehicles has been driven by the rising demand, increasing supply and a supportive regulatory framework, among the key factors of the EV ecosystem growth.

Data from the AEML show that the number of two-wheeled EVs surged by 262% to 62,409 in 2023, compared with 17,198 in 2022; while the number of four-wheeled EVs rose by 43% to 12,248 in 2023, compared with 8,562 in the previous year.

Indonesia has set the target of 12 million for both two and three-wheeled EVs and one million four-wheeled EVs, e-bus and commercial EVs on the country’s roads by 2035.

The target is expected to contribute to reducing fossil fuel consumption by 21.65 million barrels, or the equivalent of reducing CO2 emissions by 7.9 million tonnes in total. The need to electrify transport has never been more urgent, and this overhaul represents a massive opportunity to transform the future and reduce the dependence on fossil fuels.

Source: The Star

09 Jul 2024