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China’s BYD debuts passenger EVs in Indonesia

Written by Nikkei Asia Published on   3 mins read

The company says it is ‘on track’ to start constructing a local plant later this year.

China’s top electric vehicle maker, BYD, launched three passenger models in Indonesia on January 18, making a foray into an economy that is Southeast Asia’s largest and is courting such investment through new incentives.

BYD introduced its popular Seal sedan, Atto 3 sports utility vehicle, and Dolphin hatchback for the Indonesian market at a launch ceremony in Jakarta. It has not set prices, with company executives saying it will do so in February.

“Indonesia has consistently become a strategic country for many global companies to enter,” Eagle Zhao, who leads BYD in Indonesia, said at the launch. “For BYD, … Indonesia’s vision align[s] with our own.”

The vehicles are directly imported from China and run on lithium-iron phosphate batteries, as opposed to nickel-based ones, raising questions as to whether BYD will invest in a manufacturing facility in Indonesia. The country has been wooing the Chinese company, Tesla and other global EV players to invest, dangling its wealth of nickel, a key ingredient in long-range EV batteries, as a lure.

Indonesia recently issued a regulation allowing automakers to sell a certain number of imported electric cars with zero import and luxury taxes. The number is proportional to the carmakers’ commitment to developing local production capacity. The related proposals must be submitted by the end of 2025, the production facility must be built by 2026 and production must start at least by 2027 if the carmakers want to benefit from the incentives.

“We are on track to commence the construction of our facilities later this year as planned,” Zhao said, adding that BYD is also looking at participating in the country’s EV ecosystem development.

The Indonesian government’s coordinating minister of economic affairs, Airlangga Hartarto, meanwhile, told the launch via videoconference that BYD will invest USD 1.3 billion in its manufacturing facility with a commitment for production capacity of 150,000 vehicles.

But BYD’s Zhao declined to confirm those details, telling reporters to wait for a future announcement.

BYD, which overtook Tesla to become the world’s largest EV maker by sales in the final quarter of last year, has already entered Southeast Asian markets including Thailand, Singapore, Malaysia and Vietnam. It has also announced investment plans in some of those countries.

Indonesia’s sales of battery electric cars jumped nearly 70% last year to 17,051 vehicles from 10,327 in 2022 and 687 in 2021, according to wholesale data by the Indonesian Automotive Industry Association, or Gaikindo.

Kukuh Kumara, secretary-general of Gaikindo, earlier this week said that the relatively high prices compared with internal combustion cars remain a challenge for further EV penetration in Indonesia.

“EV buyers are mostly not first-time buyers. [They are] the rich with extra money,” he said, adding that last year EVs still made up just 1.7% of Indonesia’s car sales, totaling about 1 million vehicles.

While Thursday marks BYD’s debut in Indonesia’s passenger electric car market, it has already sold electric buses through local company VKTR Mobilitas Indonesia, an affiliate of the Bakrie Group. Dozens of BYD buses have been used by the TransJakarta public bus network in the past two years, and VKTR last year said it wanted to sell more of the buses in Indonesia.

Kukuh said the Chinese company has big potential to deepen its market penetration in Indonesia’s public transportation. “BYD excels at commercial vehicles,” he said. “Big cities [in Indonesia] might potentially look to use EVs for public bus services.”

The Indonesian government has been pushing to expand the domestic EV market by subsidizing purchases of both electric two- and four-wheelers. However, major automakers in the country, dominated by Japanese companies, are still hesitant on tapping the EV market.

Japanese automakers account for over 90% of the country’s auto sales. But Toyota, Lexus and Nissan combined sold just 799 electric cars in Indonesia last year. South Korea’s Hyundai led the segment, selling over 7,400 vehicles last year, followed by China’s Wuling with nearly 7,000 vehicles.

A Japanese government official on Tuesday lamented the “declining” market share of Japanese car brands in Indonesia due to their lagging behind in EV sales. “When BYD enters [Indonesia], they could take over the market,” the official said.

“In Indonesia, Chinese companies also control the mineral resources business. We have to be careful,” he added. “For Japanese automakers, EVs are crucial … for the Indonesian market. I predict that even [Indonesia’s new] president … will not stop promoting EVs.”

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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