Source: Indonesia Investments

JAKARTA, INDONESIA — Indonesia is gearing up for electric cars to curb carbon emissions, as the country invites Palo Alto-based eco-friendly vehicle producer Tesla to visit Indonesia next year to discuss sustainable investment in electric vehicles.

Coordinating Minister for Maritime and Investment Luhut Binsar Panjaitan said that the company expressed strong interest in Indonesia, without elaborating on the cooperation.

Last October, the Indonesian government held informal talks with Tesla, according to a senior minister.

It is assumed that Tesla will focus on the vital component of electric cars, namely batteries.

Electric-powered vs gas-run: What everyone needs to know 

When purchasing vehicles such as cars, price and maintenance costs are often the most crucial factors to consider.

Research by the University of Michigan’s Transportation Research Institute in 2018 showed that the average operational cost of electric vehicles is cheaper than that of cars that run on petrol.

The former’s yearly operational cost on average in the United States is around US$485 while the latter is around US$1,117.

Back in Indonesia, the research and development body at the Ministry of Energy and Mineral Resources (ESDM) also revealed that electric vehicles are more efficient than gas-powered cars.

For example, conventional cars spend one litre of fuel for every ten kilometres of travel.

If they use non-subsidy fuel at the price of around Rp 8,500 per litre, it would cost around Rp 85,000 for every 100 kilometres.

At the same time, electric cars can travel 100 kilometres with only 20 kWh of energy required.

If the tariff of non-subsidy electricity is around Rp 1,600 kWh, then electric cars only need around Rp 32,000 for the car to travel every 100 kilometres.

High selling price may serve as biggest challenge faced by electric vehicle sector in Indonesia

The COVID-19 pandemic has helped reduce air pollution following global travel and social restrictions that have compelled people to carry out their activities from home.

The Indonesian government is thus committed to supporting the electric car sector by providing subsidies for batteries, charging stations, and components.

So far, Indonesia has 62 state-owned charging stations for electric cars, according to data from the Ministry of Energy and Mineral Resources (ESDM).

CNBC Indonesia reported that the stations are owned by state power company PT PLN, state oil giant PT Pertamina, the Agency for the Assessment and Application of Technology (BPPT), and private companies.

On 12 August last year, President Joko Widodo signed Presidential Regulation No.55/2019 on the Acceleration Program of Battery Electric Vehicle for Road Transportation, paving the way for local manufacturers to design and build electric cars in Indonesia.

Indonesia is also trying to boost its nickel production, as nickel is the primary ingredient in the production of lithium batteries for electric vehicles.

Despite its benefits, the electric vehicle industry faces multiple challenges ranging from infrastructure readiness to market competition, seeing that petrol-run vehicles are still dominating the automotive market.

The high selling price of electric cars in Indonesia may prove to be an obstacle in promoting its widespread use in the country — one electric car may cost between Rp 450 million and Rp 1.4 billion.

Data from The Association of Indonesian Automotive Manufacturers (Gaikindo), on the other hand, showed that most of the Indonesian car buyers come from the middle-class to lower-class demographics, with the average price of each car being between Rp 150 million and Rp 300 million.

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