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Ride-hailing companies electrify: How will a switch to plug-in vehicles change Indonesia’s air and roads?

Written by Ursula Florene Published on     6 mins read

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A drive to Bali shows that EVs promise lower maintenance and operational costs. But Indonesia still needs serious work on infrastructure and incentives for vehicular electrification.

Jakarta is one of the smoggiest cities in the world. Roads and highways are normally clogged with motorbike taxis, tour buses, delivery trucks, private cars and other vehicles that are pumping out exhaust from their tailpipes as they sit idle during traffic jams. But changes are coming. Ride-hailing firms in Indonesia have been incrementally replacing their fleets with electric vehicles in the past two years. It’s a move that is good for the environment. More fundamentally, it may even be a boon for these companies’ bottom lines.

Grab and Gojek, the two largest enterprises of their kind in the country, both began including EVs as part of their fleets in 2019. Gojek teamed up with Indonesian auto distributor Astra International for test runs of electric motorbikes through its GoRide service in June that year. Now, the decacorn has a pilot commercial electric bike squad operating in Jakarta and its satellite cities, and is reportedly in talks with Chinese electric scooter maker Niu Technologies to add even more bikes.

Grab went straight to the top and launched its EV Ecosystem Roadmap with the Indonesian Coordinating Ministry for Maritime Affairs and Investment in December 2019. One month later, Grab unveiled its GrabCar Elektrik fleet of Hyundai Ioniq EVs for airport transport services. Last November, the company’s electric motorcycles hit the road, the bikes supplied by local manufacturers Viar and Selis, as well as Taiwanese company Kymco. So far, Grab claims to have 5,000 electric cars, motorcycles, bicycles, and scooters moving passengers across the archipelago.

Behind these changes is the Indonesian government’s desire for electrification of vehicles. Since 2019, President Joko Widodo has introduced a slew of incentives for the EV industry. And he just rolled out a new EV tax scheme for manufacturers, transport companies, and consumers. The key objective is to shape Indonesia into a regional hub for EVs, fulfilling its pledge made during the 2015 Paris Agreement to reduce greenhouse gas emissions by 29% by 2030.

The government has set a target to have at least 400,000 EVs on Indonesia’s roads for private and public transportation before 2025. This would slash 1.4 million tonnes of CO2 emissions, which is roughly equivalent to the carbon footprint of a year’s driving done by 274,000 gasoline-burning cars. This is significant in the grander scheme: research by NGO Enerdata in 2019 revealed that transportation accounts for at least 70% of carbon emissions in Indonesian cities.

Ensuring the shift to EVs, particularly for vehicles that move many people around on any given day, would be a major step to meeting the government’s targets.

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A drive to Bali: How much does a plug-in car save?

For ride-hailing companies and enterprises that operate vehicle pools, benefits to the environment after making the switch may be incidental to lowering operational costs.

An internal survey performed by Grab in September 2020 concluded that 70% of their driver partners who converted to EVs managed to increase their income because fuel costs were reduced, although the report did not indicate how much more the drivers earned. We can glean the rate of savings elsewhere: Indonesian state electricity company PLN ran their own cost efficiency trial in a two-day drive from Jakarta to Bali, covering 1,248 kilometers with two cars, Hyundai’s Ioniq Electric and Kona Electric.

PLN vice president of public relations Arsyadani Ghana Akmalaputri told local media IDN Times that the trip was divided into two parts: from Jakarta to Surabaya (787 km), then Surabaya to Denpasar, Bali (461 km). The EVs incurred just one-fifth the expenses compared to gasoline vehicles, Akmalaputri claimed.

KrASIA ran the numbers to estimate the costs for driving a Kona Electric car and Kona gasoline vehicle for the trip, and found that using an EV for the journey slashes expenses by 66%.

In 2019, Indonesia’s Agency for the Assessment and Application of Technology (BPPT) ran its own test drive and logged similar results. One major differentiating factor is cheap electricity in Indonesia, said Barman Tambunan, the head of BPPT’s Center for Energy Conversion Technology. “We also ran a similar trial back in 2018, and found that EV cost is roughly one-third that of gasoline,” he told KrASIA.

But vehicles carry other expenses, particularly for businesses that operates fleets of them. General maintenance and depreciation all show up on balance sheets. In September 2020, customer-oriented nonprofit organization Customer Reports found that in the US, lifetime maintenance costs for electric cars run at half of what would be spent on their gas counterparts. Even though repair fees for the two types of vehicles are similar, EVs “just don’t need as much maintenance as gas-powered cars,” the white paper said.

The chairman of the Association of Indonesian Automotive Industries (Gaikindo), Jongkie Sugiarto, told KrASIA that data about the costs of maintaining an EV in the country is still scarce, as the country is still in the nascent stage of adoption. “But we’ve been informed that the maintenance cost is lower than conventional ones,” he said.

That statement is seconded by Faela Sufa, Southeast Asia director of the Institute for Transportation and Development Policy (ITDP), a transportation-focused nonprofit organization. Even though her team didn’t have data on sedans or scooters, they did have comparisons between electric and conventional buses. “The maintenance cost for an e-bus is one-third that of an ICE [internal combustion engine] bus. Plus, in the long term, the cost for e-bus maintenance doesn’t increase,” she said. “I believe that cars and scooters follow this pattern.”

Sufa added that the maintenance cost for gas vehicles often rises as the vehicle gets older. This doesn’t happen with EVs, as far as projections indicate. Electric vehicles are “more financially stable in the long run,” she said.

Read this: Indonesia’s EV battery aspirations unearth mining waste problems

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Indonesians are excited about the prospects of switching to EVs, according to a report published in February by Frost & Sullivan and Nissan, but are still reluctant take the wheel and buy new plug-in cars for several reasons.

Right now, EVs still cost much more than conventional cars. Most Indonesian consumers buy cars that have price tags in the band of IDR 150–250 million (USD 10,400–17,300), while electric cars set buyers back by IDR 500 million (USD 34,600). Furthermore, infrastructure for EVs is still bare bones. PLN only runs 37 charging stations across the country.

EVs also carry lower resale value, if data from the US is a good reference. One website, iSeeCars.com, found that electric cars on average lose 52% of their value in three years, almost 1.4 times higher than the average for other vehicles. The factors that contributed to this are federal and local tax credits, lack of infrastructure, and—since this is a new type of vehicle that is still evolving—obsolescence.

Gaikindo’s Sugiarto said that EVs are still unappealing in Indonesia because of their hefty sticker prices. “Lowering prices will make EVs more appealing to wider communities,” he said.

Regulations in East and South Asia offer a reference. “That’s why in other countries like China and India, they have policies for fiscal and non-fiscal incentives. Also, as lithium battery prices become more affordable, electric vehicles’ prices will be more competitive,” said ITDP’s Sufa. “It’s just a matter of time.” She agreed that switching to EVs would be a good business decision for transportation businesses as the vehicles are less costly to maintain and operate.

For now, investing in EV fleets is a steep investment for companies. But as the infrastructure and technology continue to develop, in turn lowering costs, more electric ride-hailing vehicles will roam Indonesia’s roads, promising elevated income for drivers and reduced carbon emissions at the same time.

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