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Electric motorbikes to lead EV adoption in RI
Battery-powered motorcycles expected to replace conventional ones in five years
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he demand for electric motorcycles is projected to pave the way for electric vehicle (EV) adoption in Indonesia as the bikes would become cost-competitive with regular motorcycles by 2022, a study has shown.
The study by consulting firm McKinsey & Company showed that the total cost of owning an electric two-wheeled vehicle is expected to be equal to conventional internal combustion engine (ICE) motorcycles by next year and to be cheaper than ICE motorcycles by 2025.
As of 2020, the lifetime cost of ownership of a conventional motorcycle stood at around US$2,400, while an electric motorcycle around $2,616. The study suggests that electric motorcycles will reach cost parity with ICE bikes by 2022 as EV batteries become cheaper.
“This is why we expect electric two-wheelers to become the first [EVs] to reach 50 percent use in Indonesia,” McKinsey & Company Indonesia partner Thomas Hansmann said in an online press briefing on April 21.
He went on to say that the government needed to introduce fiscal incentives to support production of EVs, EV batteries and charging stations.
Read also: Indonesia needs 31,000 charging stations to reach electric vehicle goals
McKinsey’s findings support a growing body of opinion that electric motorcycles will lead electric vehicle adoption in Indonesia because motorcycles are generally cheaper and more widely used than cars in the country.
The Energy and Mineral Resources Ministry committed in December last year to have at least 786,586 electric vehicles on the road by 2025, of which 96.3 percent are expected to be electric motorcycles, as per its battery-based electric vehicle (KBLBB) plan.
“Electric two-wheelers will become more popular because most Indonesians are already using motorcycles, so this becomes an entry point,” said EV battery company Baran Energy CEO Victor Wirawan to The Jakarta Post on April 29.
Victor expects electric motorcycles to replace conventional motorcycles in the next five years. Baran Energy recently launched its 500cc electric motorcycle prototype called Anubis priced at Rp 300 million (US$20,746) with plans to release cheaper models in the future.
There are 15 companies in Indonesia that commercially produce two- and three-wheeled electric vehicles with a total production capacity of 877,000 units per year, with brands including Viar, Gesit, Selis and MIGO.
In comparison, only one company, PT Mobil Anak Bangsa (MAB), produces EVs with four or more wheels with a production capacity of 1,200 electric buses per year.
Read also: Indonesia to develop circular economy for EVs, boost battery industry
Victor went on to say that while price played a big role in customers' EV purchasing decisions, product quality would have a long-term impact on EV popularity.
“If consumers see that electric motorcycles are cheap, but break down easily, they will lose trust in the product. I believe that even if a vehicle is expensive, if it has good quality and efficiency, people will buy it,” he added.
Read also: Consumers’ concerns hamper electric vehicle adoption in Indonesia: Experts
McKinsey also noted that Indonesia has one of the world’s biggest potential markets for electric vehicles, especially for two-wheelers. By 2030, the country is expected to have 3.7 million two- and three-wheeled electric vehicles on the road and annual sales of 1.2 million electric two-wheelers.
Meanwhile, electric cars would still be considered a luxury item as the country is predicted to only see 1.5 million annual sales of four-wheeled electric vehicles.
“For cars, the main driver of use would be for private consumers and then fleets of cars such as ride-hailing companies,” Hansmann of McKinsey said, adding that cars that drove more kilometers per day would quickly become more cost competitive than conventional cars.
Ride-hailing giant Grab committed in April to adding 1,500 electric vehicles to its fleet this year while rival Gojek committed last week to fully using EVs by 2030 in achieving net zero emissions.
Read also: Go green? Gojek reports 1.04m tons carbon footprint in 2020, aims for 2030 net zero
Aside from being a market, Indonesia plans to become an EV and EV battery manufacturing hub in Southeast Asia.
The State-Owned Enterprises Ministry recently launched the Indonesia Battery Corporation (IBC), which is slated to begin production by 2023, while the local automotive industry is expected to export 200,000 electric cars by 2025.
“However, when it comes to manufacturing batteries and EVs, Indonesia cannot play a role as an exporter alone. If it does not have sufficient domestic demand for EVs, the cost of production would be higher than other markets,” Hansmann added.
He went on to say that for batteries, he expected 80 percent of Indonesia’s total production to be consumed domestically and the rest to be exported. While he said that two-thirds of Indonesia’s EV production needed to be absorbed by the domestic market.
