Penetration of Electric Vehicles in Indonesia is Considered to be Faster

Illustration. (Photo: Doc. Antara)

JAKARTA - Head of Industrials Asia Pacific HSBC Global Banking Misi Tang estimates that the penetration of electric vehicles (EV) in the country could be faster considering the huge potential that Indonesia already has.

"In my opinion, Indonesia can be faster (for EV penetration). Because Indonesia has existing technology, mineral resources, and supporting geopolitical dynamics. So, I think this will happen faster," said Misi at the HSBC Investment Forum in Jakarta, quoted from Antara, Wednesday, March 20.

He gave the example that electric car penetration in China only took about five years to grow from five percent to 35 percent.

The mission also estimates that electric car penetration in China could increase to 53 percent by 2025.

When penetration has reached 35 percent, Misi said that most of the new product offerings available on the market are basically EV models and there are not many combustion engine or ICE models available.

So, even though government subsidies will be removed, he projects that EV penetration will continue to increase in China.

Learning from China, Misi said that providing incentives from the government is very important when the industry is starting and being active as an accelerator in EV development. Apart from that, the role of the EV battery ecosystem is also very important.

In line with the mission, Managing Director of Wholesale Banking HSBC Indonesia Riko Tasmaya said that support for the EV battery supply chain is one of the company's current focuses, in addition to projects in other ESG sectors.

He gave the example that the company has supported Merdeka Battery Materials as well as a joint venture between LG and Hyundai which will produce battery cells in Indonesia.

"There have been several foreign investments that have just entered. About two years ago, it was a joint venture (JV) between LG and Hyundai. HSBC also supported the transaction. It was included as one of the first battery cells manufactured in Indonesia," said Riko.

On the other hand, Riko said that HSBC also supports various sectors included in the electric vehicle supply chain.

Several other players have received support from companies such as SGMW Multifinance Indonesia, VinFast, and Bluebird.

"We believe this supply chain is truly end to end. So, we can't just enter, for example, batteries. We have to enter each supply chain. Later we will see which one is the sort of priority for growth. But "Now we are entering each supply chain," said Riko.

Considering the importance of accelerating EV penetration in Indonesia, Riko reminded that collaboration between the private sector and government must continue to be strengthened.

He added that investors also need banking to play a role in connecting with the government and industrial supply chains. Therefore, his party took part in this role.

"This is a big opportunity that Indonesia is fighting for, focused on taking it to the next stage (in accelerating EV penetration). But this will also be a journey for all stakeholders, including banks and HSBC, trying to develop this. And, this is something that is not easy, said Riko.