Indonesia's rise as an EV hub
Indonesia's Electric Vehicle (EV) industry is rapidly growing, driven by government incentives and investment, boosting both adoption and manufacturing.
Indonesia embarked on its journey of Electric Vehicle (EV) car manufacturing in 2022, marking a significant milestone for the country. Its large population and substantial nickel reserves, which are crucial for electric vehicle batteries, make it an attractive market for investors. These resources have sparked interest not only in EV production but also in related sectors like smelting and battery manufacturing.
Figure 1: Four-wheeled EV sales in Indonesia
Source: Four-wheeled EV Sales, Gaikindo, 2024
EV car sales in Indonesia have seen remarkable growth over the past five years, reaching a peak in 2023. Sales of all types of EV cars more than tripled in 2023 compared to 2022. In the first half of 2024 alone, nearly 40,000 units were sold, the majority of which being hybrid vehicles.
The Indonesian government's active support has driven the rapid expansion of the EV market. Key incentives include reducing VAT from 11% to 1% for EVs with over 40% local components, and temporary Luxury Sales Tax reductions for both imported and locally assembled EVs. Furthermore, import duty exemptions are available until 2025 for cars with 20-40% local content and fully-assembled units. Investors benefiting from this incentive must start producing EVs in 2026, matching the amount of vehicles imported from 2024-2025. Indonesia aims to sell 13 million motorbikes and 2 million cars by 2030, with these measures supporting the targets.
Figure 2: Four-wheeled EV Players in Indonesia
| Company | Remarks |
|---|---|
| Hyundai | Own facilities in Deltamas, Cikarang with maximum yearly production capacity of EVs up to 70,000 units. |
| Wuling | Own facilities in Deltamas. Cikarang with yearly production capacity of 120,000 units for both EV and non-EV cars. |
| Chery | Use existing facilities by PT HIM in Bekasi with approximate yearly capacity of 7,000 units. |
| Sokonindo (DFSK) | Own facilities in Modern Cikande, Tangerang with approximate yearly production capacity of 50,000 units. |
| beta | Use existing facilities by PT HIM in Bekasi with approximate yearly capacity of 27,000 units. |
| GAG AION | A new facility in Cikampek is set to open in 2025. It aims for 30,000 units produce annually. |
| BYD | A new facility in Subang Smartpolitan is set to open in 2026. It aims for 150,000 units produce annually, with a $1 billion investment. |
| Vinfast | A new facility in Subang is currently under construction. It aims for 50,000 units produce annually, with a $200 million investment. |
Source: Four-wheeled EV Players in Indonesia, Public News, 2024
Attractive incentives offered by the Indonesian government have drawn significant investment in the EV sector, particularly from multinational companies establishing manufacturing and assembly operations. Currently, five car companies have operating plants in the country. South Korea's Hyundai and China's Wuling led the way, both launching their operations in 2022. During that same year, two more Chinese firms, Chery and DFSK, entered the market. Neta from China, began assembly operations in 2024 through PT HIM (Handal Indonesia Motor), which also manages Chery's assembly. Recent entrants include GAC AION and VinFast, which are set to begin operations in 2025, and BYD is scheduled to start in early 2026. Several battery companies and manufacturers have shown interest in investing in Indonesia, with some already present. For example, CATL and Foxconn have announced plans to invest, while Hyundai Motor Group and LG Energy Solution already have manufacturing facilities in the country.
In conclusion, the EV boom in Indonesia presents significant opportunities for the real estate market, particularly within the logistics and industrial sectors. As the EV industry evolves, real estate developers and investors should closely monitor these developments to capitalise on the emerging opportunities. The growth of EV manufacturing, battery production, and related industries is likely to drive demand for industrial land, warehouses, and showroom spaces. Additionally, EV charging facilities are becoming valuable amenities within office, residential, and retail properties.
