Indonesia is putting its economy in place to be a significant player in the market for electric vehicles (EVs).
The most obvious reason for this switch to EVs is the domestic availability of raw materials needed to make the battery pack, the most vital part of EVs. Indonesia has access to bauxite, cobalt (which lengthens the life of EV batteries), and the greatest nickel deposits in the world, accounting for around 22% of the total (used in aluminium production, which is also important for EV production). A reliable source of raw materials is ensured by having access to a variety of components for EV battery production, which might assist reducing prices.
Secondly, President Joko “Jokowi” Widodo’s direction to transition away from raw material exports and toward higher value-added commodities exports is consistent with Indonesia’s preparation to become a significant regional EV player. In January 2020, Indonesia outlawed the export of nickel ore while expanding its ability to process raw materials, produce EV batteries, and now manufacture real EVs. In April 2022, PT Hyundai Motors Indonesia released its first electric vehicle made in Indonesia.
If neighbouring economies see greater demand for EVs, expanding Indonesia’s EV production capacity would support regional exports. Indonesia also serves as a significant two, three, and four-wheeled vehicle sales market (121 million motorcycles and 22 million four-wheeled vehicles registered as of 2021).
Finally, pursuing market domination in EVs aligns with Indonesia’s sustainability objectives since the EV plan also aids Indonesia in its pursuit of net-zero emissions targets. Indonesia has advanced its objective for reducing emissions, now aiming for 32% reduced emissions (from 29%) by 2030. Considering that EVs do not produce emissions like conventional internal combustion engine (ICE) powered vehicles, an aggressive shift to EV acceptance and usage would help Indonesia lower overall emissions. Passenger and commercial vehicle emissions make up 19.2% of all emissions produced by road vehicles.
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