Indonesia's electric two-wheeler industry has expanded, with 493 electric two-wheeler models introduced since 2017, according to Budi Setiyadi, Chairman of the Indonesian Electric Motorcycle Industry Association (Aismoli). The association has 36 member brands from various backgrounds, including domestic and foreign investors and companies that have transitioned from bicycle and electric bicycle manufacturing.

Budi said, "If I look at the aggressiveness, then innovation from the industry to lure rapid growth, rapid market penetration, there were 493 electric two-wheeler models that have been born in Indonesia since 2027."

The industry's development has been supported by government regulations introduced since 2018, including Presidential Regulation Number 55 of 2019 and Presidential Instruction Number 7 of 2022, which encourage electric vehicle use in government institutions. "Because we want to be fast and sustainable, and I think the momentum is after 2018," Budi said, explaining that the increase in brands and models is intended to expand market penetration and address different consumer segments. The industry faces the challenge of sustaining demand to support continued sales.

Guangdong targets Indonesia's electric two-wheeler market

Guangdong, China, is targeting the electrification potential of Indonesia's estimated 140 million two-wheelers by encouraging investment in new energy vehicles and charging infrastructure as part of efforts to strengthen economic cooperation between the two countries.

At a forum jointly organised by the Foreign Affairs Office of the Guangdong Provincial Government and the Consulate General of the Republic of Indonesia in Guangzhou, more than 100 government representatives, businesspeople and academics discussed downstream processing of new energy products and light industrial manufacturing for consumer markets. Ma Wenfeng, director-general of the Foreign Affairs Office of the Guangdong Provincial Government, said Guangdong and Indonesia have strong economic and trade ties, according to a Chinese media report.

Trade between Guangdong and Indonesia accounts for about one-sixth of total China-Indonesia trade, while companies including BYD, Midea and OPPO have established and expanded operations in Indonesia. Ma said Guangdong has all 31 official manufacturing industry categories and 10 industrial clusters, each generating annual revenues of CNY 1 trillion (US$ 148.8 billion).

Indonesia, the world's fourth-most populous country, has more than 280 million people and access to an ASEAN market of more than 700 million people, said Tribuana Tungga Dewi, Acting Consul General of the Republic of Indonesia in Guangzhou Andalusia. She added that Guangdong's manufacturing base and technological expertise correspond with Indonesia's plans to increase industrial capacity, accelerate the energy transition and develop downstream industries.

Wu Lei, deputy general manager of Indonesia BTR New Energy Material, has worked in Indonesia for nearly three decades. In 2023, Guangdong-based BTR began building two factories in Indonesia. The first phase, valued at US$ 478 million and designed to produce 80,000 tonnes of anode material annually, was completed in 10 months. Once the second phase is completed, total investment will reach US$ 777 million and annual production capacity will increase to 160,000 tonnes.

Indonesia's estimated 140 million two-wheelers are a primary mode of short-distance transport and provide potential for electrification, said Xiong Xindong, brand strategy officer of Guangdong Lidun New Energy Technology.

Guangdong-based TCL began operating in Indonesia in 2004. TCL Technology Group Assistant President Deng Yinghao recalled that a small team initially brought product prototypes to Indonesia more than 20 years ago. TCL now has three partner factories, nine warehousing centres, operations in 17 cities and more than 1,250 retail partner outlets, with product development, organisational structure and human resources adapted to the local market. It develops televisions and air conditioners for Indonesia's climate and employs more than 1,000 local staff, including an Indonesian chief executive officer (CEO), alongside 13 Chinese employees. "We have truly taken root and integrated into Indonesia," Deng said.

Pan Yue, deputy director of the Indonesian Studies Centre at Jinan University in Guangdong Province, identified two sectors with investment potential: downstream new energy processing, including EV battery materials, energy storage equipment and new energy vehicles; and consumer-oriented light manufacturing, including smart home appliances, building ceramics and consumer electronics.

"Ongoing urbanisation and the rising purchasing power of the middle class in Indonesia are creating stable market demand for these products. These two sectors are well-suited to Guangdong's industrial strengths," Pan said.

A Guangdong-based charging solutions company has installed an integrated solar, energy storage and charging station in West Jakarta and partnered with several Indonesian two-wheeler manufacturers. It plans to build around 500 similar stations across Indonesia from October to serve tens of thousands of electric two-wheelers. Its solution can fully charge an electric two-wheeler in around 30 minutes, compared with five to six hours using conventional charging, and provides a range of up to 150 kilometres.

IESR says IDR 3 million electric two-wheeler incentive may be insufficient

The Indonesian government's IDR 3 million (US$ 170) incentive for electric two-wheeler purchases may not be sufficient to accelerate the shift from fuel-powered two-wheelers, the Institute for Essential Services Reform (IESR) said on Monday, August 24th.

The government has allocated IDR 3 trillion for the programme, targeting one million domestically produced electric two-wheelers, compared with the initially planned IDR 5 million incentive per vehicle. IESR Director of Energy System Transformation Deon Arinaldo said the incentive's amount and design should be reassessed to determine whether it can influence purchasing decisions.

IESR modelling indicates that an IDR 5 million purchase incentive combined with an IDR 3 million trade-in incentive for replacing fuel-powered two-wheelers, alongside measures such as raising Pertalite fuel prices towards market levels, could increase electric two-wheeler adoption by around 810,000 units above the business-as-usual scenario by 2030.

IESR estimates that replacing one fuel-powered two-wheeler with an electric model could provide the government with about IDR 5.6 million in benefits over 10 years through reduced fuel consumption and related costs. Including indirect benefits such as foreign exchange savings, reduced air pollution and carbon values, the total benefit could reach around IDR 28 million per vehicle.

Electric two-wheelers also have lower ownership costs, with IESR estimating battery-electric two-wheelers at about IDR 346 per kilometre to own and operate, compared with around IDR 506 per kilometre for fuel-powered two-wheelers.

"Electric vehicle incentives should not be viewed merely as purchase subsidies. If they can accelerate the shift from fuel to electricity, the government benefits from lower fuel consumption and import costs, while households gain from lower mobility costs," Deon said.

IESR called for a broader policy package covering charging and battery-swapping infrastructure, vehicle performance and the domestic electric vehicle supply chain, as well as safeguards to ensure state funds target consumers whose purchasing decisions could be influenced by the incentive. It proposed linking eligibility to the national identity number (NIK) and National Socioeconomic Single Data (DTSEN), while excluding high-income households based on income deciles or ownership of high-value four-wheeled vehicles.

IESR also recommended using the programme to support the domestic electric two-wheeler industry, with subsidised two-wheelers required to have batteries of at least 2.2 kWh, a minimum three-year battery warranty, five years of after-sales service and a domestic component level (TKDN) of at least 40%.