Indonesia to decide on electric car policy with Hyundai keen to invest in a plant in the country

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JAKARTA - Indonesia is poised to issue its first regulation on electric vehicles on Monday (Jan 14) with officials from Hyundai due to arrive in the country at the end of the month (Jan) to discuss investment plans for a green vehicle project.

President Joko Widodo is meeting his ministers on Monday to finalise the regulations which will encourage sales of electric cars as well as the development of a domestic industry for such vehicles.

Earlier, a source told The Straits Times that a debate was raging among ministers on whether Indonesia should adopt a wholly electric vehicle regime from the outset, or start first with a hybrid one that does not require charging stations as such vehicles are powered by conventional internal combustion engines.

Indonesia's maritime affairs coordinating minister Luhut Pandjaitan told a media briefing on Monday that Indonesia planned to start with electric motorcycles - possibly as early as this year (2019). The scheme would then be expanded to include public buses before private cars.

He did not give a time frame for public buses and private cars.

The government has thrown its support behind green vehicles in an effort to reduce the country's reliance on imports of fossil fuels and turn towards tapping on its abundant nickel reserves, a key material for making lithium-ion batteries.

Last week, Mr Luhut witnessed the ground-breaking of a planned US$700 million (S$962 million) joint venture project to develop a nickel-cobalt project in Indonesia.

Indonesia mulling over electric car regime choice as foreign carmakers await outcome[/paste:font]
The partners included Indonesia's Morowali Industrial Park, the Chinese battery recycling company, GEM, and Japan's Hanwa, which trades in steel, metals and alloys.

"The construction will take 16 months. By the middle of next year, we will have a plant that can supply main raw materials to make lithium batteries," Mr Luhut said.

Tesla, the American carmaker which has sold about 143,000 electric cars, relies predominantly on nickel in the form of nickel sulphide as the important cathode component in its car batteries.

Nickel makes up 80 per cent of Tesla's Model S car battery components. Cobalt makes up 15 per cent and aluminium takes up the remaining five per cent.

Hyundai Motor is keen on expanding its electric car production base to Indonesia as it is keen to take advantage of the recently built integrated industrial estate in Morowali in nickel-rich Central Sulawesi province, said Mr Luhut.

"Hyundai is very eager and sees Indonesia as a good place for one of their production bases," he said. "Soon we will be signing the IA-CEPA, giving us a good position to export there." Mr Luhut was referring to the strategic Indonesia-Australia Comprehensive Economic Partnership Agreement.

 

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Indonesia mulling over electric car regime choice as foreign carmakers await outcome

Indonesia is set to issue a presidential regulation on electric vehicles, dangling a range of tax incentives, including cuts in value-added taxes, to encourage sales and the development of a domestic electric car industry.PHOTO: REUTERS
PUBLISHED
JAN 9, 2019, 9:51 PM SGT
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Wahyudi Soeriaatmadja
Indonesia Correspondent

JAKARTA - Indonesia is juggling between two options as it moves closer to setting regulations on the adoption of electric vehicles.

The impending outcome is set to benefit Japanese car giant Toyota or South Korea's Hyundai Motor and European carmakers such as BMW.

The Joko Widodo administration is throwing its support behind green vehicles as it seeks to reduce the country's reliance on imports of fossil fuel and also tap its abundant nickel reserves. Nickel is a key material for making lithium-ion batteries.

Ministers are debating, according to a government source, whether Indonesia should adopt a pure electric vehicle regime from the outset or start first with hybrid electric vehicles (HEVs), which do not require charging stations as they are powered by a conventional internal combustion engine.

Industry Minister Airlangga Hartarto, it is said, prefers a gradual shift by using HEVs. These do not place too heavy a financial burden on the government, which would otherwise have to build charging stations and ensure that power plants have ample capacity to meet an expected surge in demand.

Energy and Mineral Resources Minister Ignasius Jonan, however, is opposed to the HEV option and instead wants the adoption of pure electric vehicles, also called battery electric vehicles (BEVs), the government source, who spoke on condition of anonymity, told The Straits Times. BEVs utilise chemical energy stored in rechargeable battery packs.



"The debates have been relatively intense. Discussions also touched on the subsidies given to hybrid electric cars in advanced countries that were recently revoked because they did not give significant impact on reducing emissions because their main source of energy is still fossil fuel," the source said.

Hyundai set to announce electric vehicle investment plan in Indonesia this week[/paste:font]
Observers expect a BEV regime to benefit Hyundai, which has been successful in playing catch-up in the electric vehicle segment.

However, Toyota, whose vehicles make up about a third of auto sales in Indonesia, is lagging behind in the global electric vehicle race on account of its scepticism about battery life and user convenience.

Indonesia is set to issue a presidential regulation on electric vehicles, dangling a range of tax incentives, including cuts in value-added taxes, to encourage sales and the development of a domestic electric car industry.

Anticipating this, Hyundai is gearing up to announce its maiden electric vehicle investment plan in Indonesia, according to a source with knowledge of the plan.

"The impending regulation is like a battle between Japanese and non-Japanese automakers in Indonesia," said an analyst with Jakarta-based equity stock brokerage Mandiri Sekuritas who asked not to be named.



TOPICS:

• INDONESIA
• AUTOMOBILE SECTOR
• ELECTRIC AND HYBRID VEHICLES

USD $4Billion World Biggest Car Battery Factory started groundbreaking. Morowali, Sulawesi island is rich of nickel laterite ore, the vital substance for lithium ion car battery. It will be one of world biggest lithium battery for electric car. Morowali, Central Sulawesi Province, Indonesia.

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Indonesia charging ahead with electric vehicle ambitions

Indonesia said Hyundai is keen on expanding its electric car production base to the country as it wants to take advantage of the recently built integrated industrial estate in nickel-rich Central Sulawesi.PHOTO: REUTERS
PUBLISHED
JAN 15, 2019, 5:00 AM SGT
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Wahyudi Soeriaatmadja Indonesia Correspondent In Jakarta
Indonesia has decided to open up the country to investment for the manufacture of electric vehicles, and at least two major carmakers are said to have shown interest.

Officials from Hyundai are to arrive at the end of this month to discuss plans for a green vehicle project, and Industry Minister Airlangga Hartarto yesterday said Volkwagen was also keen.

Mr Airlangga was speaking to reporters after a ministerial meeting chaired by President Joko Widodo decided fiscal incentives should be given to encourage the sales of electric cars and to develop a domestic industry for such vehicles.

"It's an open regime. The President has agreed," said Mr Airlangga. Both fully electric vehicles, also called battery electric vehicles, and hybrid electric vehicles - that do not require charging stations as they are powered by a conventional internal combustion engine - would be eligible.

"Next, the Finance Minister will hold consultations with Parliament and then we are ready to go," Mr Airlangga said.

Earlier, a source told The Straits Times that a debate was raging among ministers on whether Indonesia should adopt the fully electric vehicle regime from the outset, or start first with the hybrid one.



Maritime Affairs Coordinating Minister Luhut Pandjaitan told a media briefing yesterday, before the ministerial meeting, that Indonesia planned to start with electric motorcycles - possibly as early as this year. The scheme would then be expanded to public buses before private cars were included. He did not give a time frame.

Indonesia mulling over electric car regime choice as foreign carmakers await outcome[/paste:font]
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The construction will take 16 months. By the middle of next year, we will have a plant that can supply the main raw materials to make lithium batteries.

'' MR LUHUT PANDJAITAN, Maritime Affairs Coordinating Minister, on a $948 million joint venture to develop a nickel-cobalt project in Indonesia.

Indonesia, which is South-east Asia's largest economy, registers annual car sales of about one million units, and Mr Airlangga said the aim was to have electric vehicles form at least 20 per cent of total domestic vehicle sales by 2025. He said this would translate to about 400,000 cars and two million motorcycles.

The government has thrown its weight behind green vehicles in an effort to reduce the country's reliance on imports of fossil fuels and turn, instead, to tapping its abundant nickel reserves, a key material for making lithium-ion batteries.

Last week, Mr Luhut witnessed the ground-breaking of a US$700 million (S$948 million) joint venture to develop a nickel-cobalt project in Indonesia.

The partners include Indonesia's Morowali Industrial Park, the Chinese battery recycling company GEM, and Japan's Hanwa, which trades in steel, metals and alloys.

"The construction will take 16 months. By the middle of next year, we will have a plant that can supply the main raw materials to make lithium batteries," Mr Luhut said.

Tesla, the American carmaker which has sold about 143,000 electric cars, relies predominantly on nickel in the form of nickel sulphide as the important cathode component in its car batteries.

Nickel makes up 80 per cent of Tesla's Model S car battery components. Cobalt makes up 15 per cent and aluminium the rest.

Hyundai Motor is keen on expanding its electric car production base to Indonesia as it wants to take advantage of the recently built integrated industrial estate in Morowali, in nickel-rich Central Sulawesi province, said Mr Luhut.

"Hyundai is very eager and sees Indonesia as a good place for one of their production bases," he said. Referring to the strategic Indonesia-Australia Comprehensive Economic Partnership Agreement, he said Indonesia's southern neighbour could be an export market.

A version of this article appeared in the print edition of The Straits Times on January 15, 2019, with the headline 'Indonesia charging ahead with electric vehicle ambitions'. Print Edition | Subscribe

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Govt to cut to zero import duty for electric vehicles

• Marchio Irfan Gorbiano
  The Jakarta Post
  

Jakarta / Tue, January 15, 2019 / 11:52 am

Industry Minister Airlangga Hartarto (Antara/Wahyu Putro)
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President Joko “Jokowi” Widodo announced on Monday fiscal incentives for the development of electric cars by lowering the luxury goods tax (PPnBM), while Industry Minister Airlangga Hartarto said the government would cut to zero the import duty for electric vehicles.

Finance Minister Sri Mulyani Indrawati, meanwhile, explained that the government was preparing a presidential regulation that would provide incentives to support certain industrial activities, such as battery production and the construction of charging stations.

“The draft of the regulation is already formulated, but we need to consult with the House of Representatives as mandated by the value-added tax [VAT] law,” said Sri Mulyani after a Cabinet meeting in Jakarta on Monday.

Airlangga said the regulation would detail which businesses were eligible for such incentives.

“The initial step has to be the introduction of a zero percent import duty for electric vehicles,” Airlangga added.

The issuance of the regulation was long awaited, said Airlangga, as BMW and Volkswagen, among other international carmakers, had expressed their desire to invest in Indonesia if such a regulation was issued.

He previously said that the government expected 20 percent of the cars in Indonesia to be electric vehicles in 2025.

Jokowi said after the meeting that Indonesia’s natural resource wealth put the country in a good position to develop the industry.

“We have a chance to become a player in the electric vehicle [industry], because we have nickel, cobalt and mangan, which are key [materials] for building electric vehicle batteries,” said Jokowi.

He added that the widespread domestic usage of electric vehicles would also lessen the country’s burden from fossil fuel imports, saving around Rp 798 trillion in the process. (bbn)