The government has slashed the value-added tax on EVs to 1 per cent from 11 per cent, bringing the starting price of the cheapest Hyundai Ioniq 5 to under US$45,000 from over US$51,000 in Indonesia.
Hartono said a price between US$10,000 and US$13,000 would be more appealing.
There are only two EVs on offer near that range, Wuling’s Air EV Lite and Seres Group’s E1 at around US$12,300. The cheapest gasoline-powered car in Indonesia, the Daihatsu Ayla, starts under US$9,000.
China’s Seres Group is the EV manufacturing partner of technology company Huawei.
Japanese carmaker Honda displays the electric vehicle “Honda e” at the 2023 Jakarta car show in Tangerang, Indonesia. Photo: AFP
By comparison, one of the bestselling EVs in China, the BYD Seagull, starts at just over US$10,000, but other companies – and even China’s own carmakers – struggle to match that kind of pricing in export markets.
BYD’s ATTO 3, the bestselling EV in Southeast Asia in the first quarter, starts in Thailand at just over US$31,000.
Hendra Pratama, 42, a customer shopping for an EV at the car show, said the price premium in Indonesia needed to be reduced to attract lower-middle income consumers.
“It’s not affordable,” he said.
Toyota, its affiliate Daihatsu, and Honda account for two-thirds of auto sales in Indonesia but have been slow to pivot to EVs.
Hendra Budi, 44, said price was not an issue for him, but he wanted to have more confidence in the brands on offer. “If Toyota or Honda launched a full EV, we will be interested,” he said.
Toyota has said it has no plans yet to build an EV in Indonesia.
Indonesia’s industry ministry announced at the car show, which concluded on Sunday, that it would offer carmakers two more years to qualify for production incentives.
The announcement was followed by investment commitments from China’s Neta EV brand and Japan’s Mitsubishi Motors.
Indonesia has set a target of producing some 600,000 EVs by 2030. That would be more than 100 times the number sold in Indonesia in the first half of 2023.
Indonesia’s chief economic minister said he hoped the Jakarta car show would drive sales of more than 26,000 vehicles, the number sold at the previous show last year.
The final number of cars sold – and the share of EVs in that – was not available as of Monday.