Electric vehicles investment in Indonesia may be the hot topic for the upcoming months. With the race of seeking a greener transportation mode, many choose to shift to electric vehicles. The battery-powered vehicle is no longer an alien term for those following the automotive industry. According to the New York Times, Tesla experienced an 87% increase in sales in 2021. As one of the top global brands for electric vehicles, they successfully sold 936,000 units despite the computer chip scarcity. According to the article, the increase in sales is mainly due to the high demand from Europe and China.
The increase in the popularity of electric vehicles has also reached the Indonesian market. The Jakarta Post reported that recently more companies are gaining interest in the electric vehicle industry. For instance, PT Vektr Mobiliti Indonesia, Tri Sakti and Chinese BYD Auto cooperate to build the first e-bus manufacturing in Indonesia. This cooperation will also involve Bakrie Brothers Group, one of the renowned conglomerate companies in Indonesia.
Electric Vehicles Investments and Local Market
Electric vehicles investments are becoming the trend in large global automobile manufacturers. According to IEA, the demand for electric cars increased in 2020 while conventional automobiles took a nosedive. This is especially true in regions like Europe and China. China is the current leading country in the world for the number of electric cars present. They have a total of 4.5 million units. Europe follows with 2.3 million units. The astounding increase in electric car purchases may be affected by the government incentives and the overall lower ownership cost.
Despite the pandemic, the constant increase in unit sales shows that electric vehicles investments are a lucrative opportunity. In Indonesia, the increasing demand for electric cars has caused an increase in nickel market prices. Nickel is the raw material essential to produce electric car batteries. Since Indonesia holds the largest nickel reserve globally, many Indonesian mining companies enjoy a robust income with the increasing demand for battery-powered electric cars. CSIS also reported that Indonesia is planning to create an integrated EV supply chain. Four local state-owned companies have signed an agreement to form an Indonesian Battery Corporation.
The government is pushing their agenda for local battery production to decrease Indonesia’s deficit. This plan will put electric vehicles investment as a great business opportunity. Furthermore, entrepreneurs should be able to grasp other related opportunities. For instance, opportunities like raw material production, battery and electric cars manufacturing, and charging ports are also lucrative. If entrepreneurs can get their hands on one of them, this could be a great business opportunity.
Investment Trends in Indonesia
The investment trends in Indonesia is shifting to decrease Indonesia’s dependency to import goods while aligning with the promise of a greener alternative. The government is currently working to produce energy materials locally. As a country with one of the largest raw material reserves, Indonesia has been importing energy materials from abroad. CSIS also reported that the Ministry of Energy and Mineral Resources is pushing to develop the downstream industries. This statement is in line with the statement that President Joko Widodo and the Coordinating Minister of Maritime and Investment gave on their previous trip to Saudi Arabia.
The visit to Saudi Arabia results in Indonesia signing an investment deal with Saudi Arabia amounting to $44.6 billion. Within the deal, $13 to $15 million is an investment deal with Air Products and Chemical. The purpose of the deal with the said company is to increase energy sovereignty in Indonesia by minimizing energy product imports. The investment between Air Products, state-owned local companies and local companies will focus on the downstream industry where low-calorie coals are processed to create dimethyl-ethel. The chemical substance will be used to substitute LPG.
If the government manage to follow through with their plan, the country may expect improvements in the economic sector. Foreign investors are also very likely to pour into the country. The rise in foreign investments will be beneficial to local companies and the local job market. In this case, electric vehicles investment is a lucrative opportunity for local entrepreneurs.
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