Honda Motor is launching its first electric two-wheeler models in Indonesia, seeing Southeast Asia as a promising market as the global motorcycle leader steps up its electrics business.
The EM1 e: scooter, which is also scheduled to go on sale in Japan in late August, will be the first electric two-wheeler made by Honda for the Indonesian market. The scooter will cost about JPY 300,000 (USD 2,100) in Japan and has a cruising range of 53 kilometers.
Although the specifications for the Indonesian model have not been disclosed, a Honda representative called it “a vanguard that explores customer reactions and needs as the first mass-market model.”
Honda will release another model in Indonesia within the year with two more on the way possibly next year. There are plans to sell seven e-motorbike models by 2030, with a sales target that year of 1 million units. According to the Association of Indonesia Motorcycle Industry, 5.22 million two-wheelers were sold in the country last year.
The models for Indonesia will include those with cable-charged batteries as well as models that use swappable batteries. Honda is also considering new investments in factories in Indonesia.
Honda aims to sell 3.5 million e-motorbikes globally in 2030, with almost 30% of those sales coming from Indonesia. It plans to electrify all of its motorcycles by the mid-2040s.
The Southeast Asian motorcycle market reached 10.6 million units in 2022, according to Germany’s Statista. It is the world’s third-largest market after China at 15.5 million units and India at 12.63 million units. Indonesia accounts for half the region’s market with a scale of more than 5 million units.
Honda held the lion’s share of the Indonesian motorcycle market in the fiscal year ended March 2023 with 88%, according to the company. Combined with compatriots such as second-place Yamaha Motor, Japanese brands control more than 90%. They dominate the rest of Southeast Asia as well.
“Japanese companies have a high share in gasoline vehicles and have been slow to electrify,” said Hirotaka Uchida, a partner at U.S. consulting firm Arthur D. Little. “Market leader Honda has started its electrification shift in response to Chinese and local competitors.”
Indonesia’s electric two-wheeler market may be tough for Honda to crack. Although it dominates the gasoline-powered bike market, rivals in the electric sector are increasing. Companies are moving quickly to invest in factories to take advantage of the government’s preferential policies for domestic production, such as an IDR 7 million (USD 465) subsidy for bikes with a domestic production rate of 40% or more that was implemented in March.
One new challenger is Electrum. Backed by Indonesian ride-hailing giant Gojek, the company started building a plant in West Java last month. The plant is initially expected to produce 250,000 units a year and is scheduled to be completed in mid-2024. According to local reports, the company plans to invest USD 1 billion over the next four to five years.
“The production could reach up to 1 million units per year,” said Pandu Sjahrir, CEO of Electrum.
China’s Yadea entered the Indonesian market in February, starting production using the knockdown method in which parts are imported and assembled at a partner company’s factory. The company is considering building a USD 1 billion plant in the Philippines to increase its supply capacity in Southeast Asia, according to Reuters.
Taiwan’s Gogoro, which has been called the Tesla of electric motorcycles, has also formed a strategic alliance with Gojek and is rushing to develop an ecosystem for e-motorbikes in Indonesia.
The market for electric two-wheelers is starting to move in other Southeast Asian countries, following in the footsteps of Indonesia and its abundant government subsidies.
In Vietnam, the world’s fourth-largest market, domestic carmaker VinFast has taken the lead in product launches, and startups are entering the market one after another. In Thailand, state-owned oil companies Bangchak and PTT are in the e-motorbike rental business.
According to Statista, e-motorbikes accounted for less than 1% of the market in Southeast Asia as of 2022. The figure in China is about 20%, with the country leading the rest of the world much as it does in electrified four-wheeled vehicles. In India, the market has entered a growth period, reaching 4% in 2022. Southeast Asia’s market is still in its infancy.
A lack of charging infrastructure is a challenge.
Pricing is also an issue, as e-motorbikes are generally about 30% to 50% more expensive than conventional gasoline bikes.
According to a June report by Japan’s Yano Research Institute, electric two-wheelers accounted for 13% of global two-wheeled vehicle sales, excluding electric kick scooters, as of 2022. The figure is projected to grow as high as 27% in 2030 and 36% in 2035.
“In the two-wheeled vehicle market, which targets relatively low-income groups, whether or not cost performance can be improved is the key to popularization,” said Akira Miyakoshi of the Japan External Trade Organization Bangkok office, who is familiar with the market.