Indonesia is taking significant strides both domestically and internationally in the current era of vehicle electrification. In its quest to dominate the ASEAN electric vehicle market, Indonesia faces fierce competition from Thailand. Nevertheless, Indonesia holds the potential to surpass Thailand in the electric vehicle industry.
According to a report by asia.nikkei.com, Indonesia is well-positioned to outperform Thailand in the electric vehicle market sector due to its abundant reserves of raw materials, particularly nickel, which is the largest in the world.
Recognizing this advantage, President Joko Widodo, popularly known as Jokowi, has actively engaged world leaders during the G7 summit held in Japan, urging them to invest in Indonesia’s electric vehicle sector.
In contrast, while Indonesia is actively promoting itself to attract investments in electric vehicles, Thailand is currently preoccupied with the formation of a new government.
Additionally, Thailand has witnessed a decline in automobile production since reaching its peak of 2.45 million vehicles in 2013. This decline continued, and in 2022, production dropped to 1.88 million vehicles, representing a significant 23% decrease. The decline in production can be attributed to the relocation of manufacturing operations to other countries, partly due to major floods experienced in the 2010s.
On the other hand, Indonesia’s automotive production has experienced remarkable growth, increasing by over 30% during the same period. In 2022, Indonesia produced 1.47 million units, approaching nearly 80% of Thailand’s production in the same year.
In a notable development, Hyundai Motor of South Korea and SAIC-GM-Wuling of China have commenced local production of electric vehicles in Indonesia. Furthermore, discussions with Tesla are reportedly underway, with the possibility of an initial agreement to establish manufacturing facilities in the country.
To further bolster the entire electric vehicle ecosystem, LG Energy Solutions of South Korea is currently constructing a battery factory in collaboration with Hyundai Motor. The facility, expected to commence operations in 2024, will play a crucial role in meeting the growing demand for electric vehicle batteries.
Not only companies from South Korea, but China’s CATL also has plans to construct a new production plant in Indonesia. The facility aims to produce raw materials and precursors, with operations expected to commence by 2025.
In a bid to promote the adoption of electric vehicles in Indonesia, the government has introduced a policy to reduce the value-added tax (VAT) for domestically-produced electric cars and buses. This initiative aims to incentivize the local market and accelerate the transition to cleaner and more sustainable transportation.
Meanwhile, the Thai automotive industry traces its roots back to the 1960s when Japanese manufacturers, including Toyota, began production in the country. Over the years, Thailand has become a major automotive hub not only in Southeast Asia but also for exporting vehicles to regions such as Australia, the Middle East, and Africa.
However, as the world undergoes a global shift towards electric vehicles, the previous winning formula for countries built on gasoline-powered vehicles is becoming obsolete. The rise of electric mobility presents new opportunities and challenges that require adaptation and innovation from all players in the automotive industry.
