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Indonesia develops a circular economy for electric vehicles, boosting the battery industry.

Indonesia intends to adopt a circular model for its emerging electric vehicle (EV) sector and plans to partner with major companies from global manufacturers to produce EV batteries. Doddy Rahadi, head of the Industrial Research and Development Institute (BPPI) at the Ministry of Industry, said the government is accelerating the development of electric vehicles and has provided incentives to help the industry grow. The Ministry is promoting the development of battery technology with a circular economy concept in response to the main challenge of electric vehicles, which is the accumulation of lithium battery waste due to their battery life and limited charging cycles.

Under the direction of President Jokowi J. Widodo, Indonesia’s local automotive industry will start producing electric vehicles between 2021 and 2022, in anticipation of exporting 200,000 electric vehicles by 2025, as Indonesia is set to become a major player in the electric transportation economy. This figure represents approximately 20% of the total 1 million vehicles exported each year.

Local electric vehicle manufacturer PT Mobil Anak Bangsa (MAB) has a production capacity of 1,200 electric buses per year, and there are 15 other two and three wheel electric vehicle manufacturers with a total production capacity of 877,000 vehicles per year, including brands such as Viar, Gesit, Motor Selis and MIGO.

Yucuanto Susetyo, director of PT Kencana Laju Mandiri, whose product is the two-wheeled electric vehicle brand Viar Motor Indonesia, said that the potential benefits of global manufacturers coming to Indonesia to invest in the EV-related industry would outweigh the risks, and that this was the main reason for the West Indian majors to invest in Indonesia. With the major players investing in this industry and market, it is expected to improve the quality of human capital in the EV industry and increase Indonesia’s competitiveness in the EV component industry, but there is also a need to consider the strategy of Indonesian brands so that local brands can gain a foothold in the market in the future.

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