At the heart of Indonesia’s decarbonization is the transportation sector, which accounts for over a third of GHG emissions. Electrification of the transportation sector is expected to have a significant impact on emissions reductions in Indonesia, especially given Indonesia’s size and position as one of the largest automobile markets in the world with over one million sales generated in 2023.
The Indonesian Government has set a target of having EVs make up 20 percent of all car sales by 2025, and it aims for 600,000 EVs to be domestically produced by 2030. However, the current reality paints a different picture. In 2024, electric vehicles only achieved a 1.5% market share, underscoring the need for significant transformation.
To turn these headline goals into tangible facts on the ground, transportation policy must be approached through a holistic lens. This means policies should not be solely focused on the deployment of the electric vehicles (EVs) themselves, but also on the supporting infrastructure, supply chains, and resources that must be made readily available, and at scale.
The Need for Enhanced Infrastructure
In 2022, Indonesia had only 439 charging stations and 961 battery swapping stations, most of which were located in urban areas such as Java and Jakarta. Expanding Indonesia’s EV infrastructure will be a complex and daunting challenge that goes beyond increasing the number of charging stations and battery swapping stations, as several hurdles remain, for example, the investment requirements for public chargers, the lack of operational standards, the limited availability of land for chargers, and an unproven business model for charging and battery swapping stations.
The Role of Private-Public Partnerships
This leaves a huge role for private-public sector cooperation to play in building the country’s EV ecosystem. As Indonesia’s leading diversified investment company, Indika Energy is a pioneering example of such collaboration.
Taking a multi-faceted approach, Indika Energy has expanded its business ventures to electric two-wheelers, named ALVA – specifically known for high-end sophisticated electric two-wheeler models. Our investment in the electric vehicle industry is not limited to the vehicles but also covers the ecosystem including batteries and charging stations. Besides ALVA, we also have Kalista – our subsidiary that provides a wide variety of electric vehicles including buses. Kalista has been partnering with the Indonesian Government to provide electric buses in five cities across Indonesia (Jakarta, Bogor, Bandung, Surabaya, and Medan). Through These initiatives, India aims to be a partner in supporting Indonesia’s energy transition and ultimately in meeting the country’s net-zero goal.
Innovation and Funding
Beyond our business ventures, we continue to expand our footprint in the sector through innovation and funding. In January 2024, Indika Energy announced a new partnership with a sustainable venture capital fund, Shift4 Good, which aims to support entrepreneurs in the decarbonization of the transport sector. With a specific regional focus on Europe and Southeast Asia, it is hoped that their innovation will help address some of the biggest challenges in developing an EV ecosystem in Indonesia.
Partnerships such as these are essential to ensure sustainable development as, alongside government subsidies, sustainable institutional financing must be leveraged as a key tool to drive innovative solutions into national policy strategies. To this end, the Indonesian government has offered a number of incentives to investors, which has inevitably led to an influx of foreign direct investment (FDI) into the nickel and electric vehicle (EV) industries. In fact, over the past 3.5 years, Indonesia has signed more than a dozen deals worth more than $15 billion for battery and electric vehicle manufacturing in the country.
Indonesia’s EV Potential
Indonesia’s natural endowment of critical minerals coupled with its substantial vehicle market are just a few reasons why the nation has the potential to be a leading player in the EV industry – both as a producer and consumer. Our government has not only set the right narrative but has facilitated a favorable regulatory environment through policies that the vibrant private sector is taking advantage of.
Of all the measures needed to make the EV revolution a reality, new ways to access financing to spur innovation are paramount. This will allow us not only to remain globally competitive with the latest technologies but also to deliver more cost-effective solutions in a timely manner – two key concerns of the energy transition that cannot be overlooked.
