Indonesia Grants Incentive as Strategy to Boost Low-Emission Vehicles

Offering incentives for hybrid electric cars is perceived as a middle-ground in endeavors to promote the adoption of greener vehicles.

Rahmad Fauzan

27 Feb 2024 - 16.56
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Indonesia Grants Incentive as Strategy to Boost Low-Emission Vehicles

The Nio ES6 electric SUV, made in China, is on display at the Shanghai Auto Show./ Bloomberg Doc.

Bisnis, JAKARTA — Incentivizing hybrid motorized vehicles represents as the middle-ground for the Indonesian automotive industry, currently focusing on nurturing the potential of low-emission vehicle markets, especially given the subdued sales of electric vehicles (EVs) compared to hybrid cars. According to Ministry of Industry data, domestic sales of electric cars in 2023 are projected to reach 17,062 units, marking a notable 65.2% year-on-year (YoY) increase.

Despite this growth, electric car sales still lag significantly behind the robust expansion seen in the hybrid segment. General Secretary of the Association of Indonesian Automotive Industries (Gaikindo) Kukuh Kumara anticipates that hybrid car sales will soar to 50,000 units in 2023, representing nearly a fivefold increase from the previous year's figure of 10,344 units.

"It surged to 50,000 units. Hybrids are gaining popularity as they address consumer concerns regarding emissions reduction, fuel savings, and affordability," explained Kukuh to Bisnis last week. The robust sales of hybrid cars contrast with the challenges facing electric vehicles, which are hindered by factors such as perceived unattractive pricing and inadequate supporting infrastructure.

Moreover, electric vehicle consumers typically do not represent a significant proportion of first-time car buyers. Considering this less-enthusiastic scenario, Kukuh suggests that the government needs to take decisive action. One such measure is offering incentives for a segment with greater potential, namely hybrid vehicles. "Therefore, these incentives are crucial for establishing Indonesia as the hub for the hybrid car industry, rather than allowing other countries to take the lead. This action must be taken swiftly," emphasized Kukuh.

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