Indonesian electric two-wheeler continues to push forward

Electric two-wheeler market status

In terms of four-wheelers, the Indonesian government expects to increase the market share of electric vehicles to 25% of total vehicle sales by 2030. In 2019, among the four-wheelers owned by Indonesian residents, electric vehicles and hybrid vehicles accounted for only 1.1% and 7.6%. According to the report, the number of electric two-wheelers and four-wheelers in Indonesia in 2020 will be 1,947 and 230, respectively, and will increase to 2,600 and 760 respectively in 2022.

Since 2010, Indonesia has become the largest motorcycle market in Asia and the third largest in the world. The current penetration of electric two-wheelers in Indonesia is similar to that in China ten years ago, and the market shows great growth potential.

According to the report, there are 1,947 electric two-wheelers registered in Indonesia in 2020 and 15 local electric two-wheelers production companies, with a total annual output of nearly 900,000 units. By the end of 2022, there are 26,000 electric two-wheelers on the road in Indonesia, including B2B and direct consumer purchase.

As of the fourth quarter of 2022, Indonesia had 961 electric two-wheeler conversion stations, well below the target level of 4,000 by the end of 2020, 14,000 by 2025 and 52,000 by 2030. At present, the growth of battery swap station is hampered by different battery types and requirements, and Indonesia needs to be able to build a multi-brand infrastructure.

Between 2018 and 2023, the market size of electric two-wheelers in Southeast Asia has grown rapidly and is expected to exceed 3 trillion RMB by 2025. With the continuous acceleration of Indonesia’s second wheel oil to electricity, Indonesia’s electric second wheel market has great potential for future development.

The driving factors of two wheeler market in Indonesia

This section will focus on several major driving factors for the development of the Indonesian electric two-wheeler market.

Policy promotion

“Fuel to electricity” policy objectives: In order to reduce carbon emissions, the Indonesian government has launched a plan to convert fuel two-wheelers to electric two-wheelers, set a goal of converting 20% of fuel two-wheelers to electric two-wheelers by 2025, and the number of electric two-wheelers to reach 1.8 million, and plans to sell only electric two-wheelers in Indonesia from 2040.

Accelerate the construction of electric vehicle charging stations: The battery swap service is an emerging solution to the problem of how to charge motorcycle battery and electric two-wheelers (E2W) in urban areas. On September 1, 2020, Indonesia launched the first ever electric motorcycle battery swap station to reduce the cost of electric vehicles and create new business opportunities.

On September 17 of the same year, the Indonesian Ministry of Industry issued No.27/2020 regulation, which formulated the development plan for the electric vehicle industry: it is expected that by 2030, Indonesia will have more than 30,000 electric vehicle charging stations.

Corporate tax cuts and subsidy program: The Indonesian government announced on March 6, 2023 that it will launch an electric vehicle subsidy program from March 20, which includes the sale of 200,000 electric motorcycles and 35,900 electric vehicles and the conversion of 50,000 traditional gasoline vehicles, according to the Indonesian Industry minister.

The amount of subsidy will be determined based on factors such as battery capacity, range, degree of localization, and the purchase of an electric motorcycle that meets the requirements will be eligible for a subsidy of 7 million rupiah, as will the conversion of an internal combustion engine motorcycle to an electric motorcycle.

The subsidy policy stipulates that electric motorcycles that receive government subsidies must be produced in Indonesia, and the proportion of locally produced parts should be more than 40%, and eligible electric motorcycle manufacturers shall not increase the sales price due to government subsidies.

In addition, the Indonesian government also plans to provide tax incentives, land lease relief, infrastructure support and other incentives for companies investing in the construction of electric vehicle production facilities in the country. On April 3, the Indonesian government announced that it would cut the value-added tax on the sale of battery electric vehicles from 11% to 1%.

Indonesia promotes local production of nickel-based batteries: As one of the world’s largest nickel exporters, Indonesia plans to use the country’s abundant nickel mineral resources to become a power battery production center. Indonesian state-owned enterprises and battery-related companies will work together to establish an electric vehicle and power battery industry chain, and jointly promote nickel mining and smelting, precursor and cathode material production and recycling projects.

Economy

Motorcycle use costs can be divided into purchase costs, fuel costs and maintenance costs, according to AC Ventures and AEML report shows that electric two-wheelers compared with traditional fuel two-wheelers, energy costs can be saved by more than 40%, use costs can be saved by 50%.

Compared with the current oil motorcycle and electric two-wheeler in the Indonesian market, the latter is more expensive, and the oil to electricity subsidy launched in 2023 has been able to make up most of the difference between the two. However, the endurance, speed and other performance of existing electric two-wheelers in Indonesia are generally slightly inferior to traditional fuel two-wheelers.

Driven by delivery companies

Indonesian delivery companies Grab and Gojek both intend to convert their two-wheeler fleets to electric vehicles. Grab and Gojek have both taken steps to partner with electric vehicle manufacturers to provide their drivers with electric scooters and electric vehicles.

Gojek: Gojek announced its zero carbon plan in late April 2021, making it one of the first startups in Southeast Asia to publicly set ESG targets. In a May 2021 announcement, Gojek pledged to convert its entire fleet to electricity and become carbon neutral by 2030.

It also plans to deploy 5,000 electric scooters in south Jakarta, up from 500 initially, from Indonesian brand Gesits and Taiwanese brand Gogoro, with users paying a daily fee to rent them.

Grab: Grab has also announced a zero-carbon commitment, ordering 6,000 electric motorcycles from local manufacturer Viar Motor in 2021 and launching a new service, GrabElectric, from July 14, 2021, which enables users to hail a hybrid or electric car at the same price as a gas-powered car ride.

GrabElectric (Electric Motorcycle) provides riders with free maintenance services, and registered riders between the ages of 18 and 55 can apply to participate in the program. Non-platform registered riders can collect and use the vehicle after paying a deposit, and the vehicle is automatically returned after the contract expires. The use fee is Rs 50,000 per day, the minimum rental period is 30 days, and Grab riders do not require a deposit. Battery replacement service is also available at Rs 8,000 per visit.

Competitive landscape of electric two-wheeler in Indonesia

Under the trend of “fuel to electricity” in Indonesia, a number of players have entered the Indonesian electric two-wheeler market. Among them, the motorcycle giant Honda, which has been deeply farming in Indonesia for many years, also announced that it will do product upgrades, Honda said that it will launch more than 10 pure electric motorcycles before 2025, and plans to sell 3.5 million electric motorcycles in 2030, accounting for about 15% of global sales. But Honda currently sells 100,000 to 200,000 electric motorcycles a year, less than 1% of its overall sales.

Indonesian local brands SWAP, Gesits are also making efforts in Indonesia’s electric two-wheeler circuit, Chinese companies such as Mavericks, Yadea, AIMA electric vehicles in the past few years have been laid out in Indonesia, other active layout in Southeast Asia brands also include Shark Bay, Keeway, Soco, Paidian, China Taiwan brand Gogoro and so on.

• Honda

Honda has an overwhelming advantage in the motorcycle market in Indonesia, ranking first in 2022 with a 74% market share and being the most popular brand in Indonesia. At the end of 2018, Honda jointly launched the first lithium battery two wheeler V-GO with Wuyang Honda and New Continent Honda;

In April 2019, together with several major Japanese motorcycle manufacturers (Kawasaki, Suzuki and Yamaha), the electric motorcycle swappable battery Alliance (Consortium) was established with the aim of increasing the penetration of electric motorcycles in Japan.

In March 2021, the alliance reached an agreement to standardize the custom lithium battery and swap system, thereby enabling battery sharing and paving the way for the popularization of electric motorcycles in Japan.

• SWAP and Smoot

Smoot Motor is the first smart electric motorcycle in Indonesia to be equipped with the swappable battery system, using SWAP Energy’s battery replacement ecosystem. SWAP and Smoot were founded in 2019, based on localized insights to create intelligent electric motorcycle and swap station products, the electric motorcycle can meet the needs of users in the three dimensions of battery life, speed and quality;

The number of swap stations accounts for more than 60% of the overall market, and its operation process, offline power replacement function, mileage charging scheme and other designs can meet the use habits of local users. So far, SWAP has set up more than 1,000 battery swap outlets in Indonesia, mainly in Jakarta and Bali, and has more than 180 dealers throughout Indonesia, and sister company Smoot is responsible for selling complete vehicles.

The founder and CEO of SWAP has more than 10 years of experience in China’s battery and charging bank industry. He co-founded Caller Technology, participated in the laying of 40W charging bank points in China, and has strong battery channel laying ability. He also has living and working experience in China and Southeast Asia and has a deep understanding of the local market in Southeast Asia.

SWAP creates competitive barriers in terms of supply chain costs and localization channel expansion. From the perspective of supply chain, the company has China’s leading electric motorcycle supply chain resources, and has its own swap station factory, with significant cost structure advantages.

At present, the price of Smoot’s car is about 7,800 RMB, and the price of a fuel motorcycle with similar configuration is about 9,000 RMB. Smoot’s car relies on supply chain optimization to form a cost-effective advantage.

From the perspective of channels, SWAP has rich cooperation resources, has signed cooperation agreements with Grab, Lazada and other head travel platforms, and has covered mainstream dealers in Indonesia, and is the best motorcycle brand for dealers. At SWAP, riders can replace vehicle batteries in just 9 seconds.

The SWAP uses LFP lithium-ion batteries with a range of 60 km; At the same time, a mobile program is designed to help users find the nearest exchange point, control the battery condition and activate the anti-theft system.

• Gesits

Gesits (Garansindo Electric Scooter ITS) is an electric motorcycle company produced by PT Wika Industri Manufaktur. Gesits electric motorcycles, through various trials, plan to produce 60,000 units per year.

• UWINFLY

PT. UWINFLY INDONESIA INDUSTRIES is a company engaged in the manufacture of electric bicycles and electric motorcycles. Founded in 2001 in Tianjin, China, PT. Uwinfly has been producing and selling electric two-wheelers under the U-Winfly brand in Indonesia since 2018.

According to the official website, U-Winfly has sold more than 28,000 products in Indonesia and has more than 30 dealers. Featuring environmental protection, after-sales service and economy, U-Winfly can travel 60 km on a single charge for only Rs 2,000.

• Gogoro

Founded in 2011 in Taiwan, Gogoro provides level changer stations for two-wheelers and has also developed its own electric two-wheelers. Gogoro’s expansion model is to form a joint venture with a local partner, which will be responsible for hardware manufacturing, and Gogoro will be responsible for building the grid and promoting the core power conversion technology to the sea. In April 2022, Gogoro went public in the United States.

Gogoro, Hon Hai, Indonesia Battery Corporation (IBC) and Indika Energy have announced a joint charging swao system in Indonesia, which will start with lithium battery manufacturing process and extend to the four-wheel electric vehicle, two-wheel electric vehicle and electric bus industries.

The scope of cooperation also includes the development of supporting industries for electric vehicles, including energy storage systems, battery swap sattion, lithium battery recycling, and research and development of batteries and electric vehicles.

• NIU

Niu Electric has launched GOVA smart motorcycles in Indonesia since the end of 2020, and has achieved certain sales performance on Shopee. According to the feedback of local Chinese people in Indonesia, Calf in Indonesia is taking a relatively middle-to-high-end route, and has a booth in the best shopping malls.

While the two wheeler industry in Indonesia is still at a very early stage, we see a rapid rise in the sector in the near future, driven by government initiatives and two-wheeled battery swap company.