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Indonesia's e-motorbike makers hit the accelerator

Foxconn, Gogoro, Grab join locals to fill gap in charging infrastructure

A consumer checks out an electric motorbike at the Indonesia International Motor Show in April. (Photo by Erwida Maulia)

JAKARTA -- Indonesia's motorcycle market, one of the world's largest, is going electric as superapps, a sovereign wealth fund and even a coal miner are racing to grab a piece of the new business.

Domestic manufacturers in Southeast Asia's largest economy are riding on the government's broader electric vehicle push, which includes a target of 13 million electric motorbikes on the road by 2030 -- a huge jump from around 12,000 last year in the country of more than 270 million people. In comparison, there were over 110 million gasoline motorbikes in Indonesia in 2020, according to data from market and consumer data provider Statista.

The government is also planning to build 32,000 public charging stations by 2030 and has introduced incentives such as electricity bill and tax discounts for electric vehicle owners. With less than 200 public charging stations at the end of last year there is far to go in terms of essential infrastructure, though companies appear undeterred, while rising battery prices have emerged as a new challenge.

Miner Indika Energy, in a push to diversify from coal, is the latest Indonesian company to dive into the sector, announcing the establishment of electric motorcycle manufacturer Ilectra Motor Group in April. And late last month, Indika unveiled a $15 million joint investment into Ilectra with Indonesian venture capital firm Alpha JWC Ventures and Hong Kong-based Horizons Ventures.

Earlier in January, Indika signed a preliminary agreement with Taiwanese tech titan Foxconn and electric scooter maker Gogoro, as well as state-owned Indonesia Battery Corporation, to "explore a wide scope of investment cooperation" in Indonesia's EV ecosystem. The companies said that could include battery manufacturing and recycling, battery swap stations and production of electric motorcycles, cars and buses.

Also in May, Volta Indonesia Semesta said it was aiming to produce 60,000 electric motorbikes this year. A joint venture between Jakarta-listed digital services provider M Cash Integrasi and local last-mile delivery startup SiCepat Ekspres, Volta began commercial operations at its manufacturing facility in Semarang, Central Java Province, in November.

The target far exceeds Volta's total sales of just 506 electric motorbikes last year. It said it has received an order for at least 10,000 bikes from SiCepat, which counts Singaporean sovereign wealth fund GIC among its investors, according to a March report by DealStreetAsia.

To deal with the lack of public charging stations, SiCepat and M Cash are teaming up to develop a network of battery swap stations -- including at SiCepat drop-off points. Irwan Supriatna, a national sales manager at Volta, told Nikkei Asia in April it was targeting 500 battery swap stations to be operational by the end of this year on Java and Bali islands -- four times the current number concentrated in the greater Jakarta area.

Some other local electric motorbike makers have made similar announcements in the past year and most of those are taking matters into their own hands when it comes to charging by partnering with others to develop battery swap facilities. While charging can take hours, it requires just a few minutes to replace used batteries with new ones.

State-owned Wika Industri Manufaktur, which manufactures Gesits e-bikes, along with Taiwan's Gogoro, are teaming up with Indonesian ride-hailing unicorn Gojek and state oil giant Pertamina.

Gojek last year launched Electrum, a joint venture with local energy company TBS Energi Utama, to expand Indonesia's EV ecosystem. The ride-hailer has pledged to convert 100% of its driver fleet to EVs by 2030 as part of its net zero emissions push. Gojek is currently running a trial program, under which customers in Jakarta can order a ride with an electric motorbike through Gojek's smartphone app.

President Joko Widodo visits the launch in February of a collaboration by companies to develop an e-motorbike ecosystem. (Photo courtesy of Indonesia's presidential office) 

Singapore-based Grab, Gojek's rival, last year placed an order for 6,000 electric motorcycles from Viar Motor Indonesia. Starting out as an electric bike maker, Viar is currently running an electric two- and three-wheeler factory in Semarang.

Grab in March launched a collaboration with another local electric motorbike maker, Smoot Motor, and its sister company, battery swap station startup Swap Energi, as well as state utility Perusahaan Listrik Negara.

Ridzki Kramadibrata, president of Grab Indonesia, said the ride hailing company has been operating 8,500 electric vehicles in Indonesia, most of which are motorbikes, and is aiming to increase the number to 14,000 by the end of this year. Swap, meanwhile, said it has erected 400 battery swap stations at convenience stores and gas stations across greater Jakarta, and dozens of others in Bali.

The electric motorbike announcements come as Indonesia's economy continues to recover from the COVID-19 pandemic and amid growing consumer curiosity about this fresh mode of transport.

At the Indonesia International Motor Show in Jakarta in April, visitors took test rides at Volta and Gesits booths. Volta prices are set at 20 million rupiah ($1,365) per bike or lower, with Gesits bikes approaching 30 million rupiah. The prices are roughly similar to low- and high-end internal combustion engine motorbikes on the local market.

"With various options available now and news about the government's support, public interest is growing, especially in the past year," Supriatna said at Volta's booth. He added that most of its retail customers are in their 20s or 30s, buying electric motorbikes "for prestige."

Dewa, a civil servant in Bali who wanted to be identified by one name, said he and his younger brother have been using a Viar motorcycle since 2019. They mostly take it for short rides, so only need to charge once every few days at home.

"We've saved a lot on gasoline, and there's [barely] any effect on electricity bills," Dewa said, adding that his Viar needs less regular maintenance than gasoline motorbikes. The drawback, however, is that it runs slower, with a maximum speed of 40 kph.

Analysts say the outlook for electric motorbikes in Indonesia is promising as the large number of regular motorcycles on the streets indicates strong potential demand, with electric cars still too expensive for local customers.

Nevertheless, Japan's Yamaha Motor and Honda Motor, which dominate Indonesia's motorcycle market, appear somewhat hesitant to jump into the domestic electric motorbike industry. In April, Yamaha introduced its E01 model during the IIMS expo and also launched a market test, but shared no specific plan for a commercial launch. Honda, meanwhile, is still carrying out a market study after introducing its electric scooter PCX for limited use by Gojek and Grab in 2019, with local executives hoping they can launch an electric motorbike for Indonesia's retail market in 2024, according to local reports.

Koketso Tsoai, autos industry analyst at Fitch Solutions, said Indika and Gojek's Electrum tie-ups with Gogoro could "make a big difference in achieving success," citing Gogoro's know-how from Taiwan and the potential for similar outcomes in Indonesia. He was less upbeat, however, about other local players.

"Some local players without partnerships with well-established motorcycle manufacturers will face headwinds, especially in procuring batteries and the general manufacturing of electric motorcycles," Tsoai said in an email interview with Nikkei. "So we are not too excited on local players without prior motorcycle manufacturing experience."

Additionally, battery prices have soared in recent months on the back of supply disruptions from the Russia-Ukraine war and related sanctions on Russian metals, which could deter Indonesia's price sensitive consumers.

"Prices remain high for the would-be electric motorcycle buyers and prospects of prices rising further due to a rise in battery material prices could delay the takeoff especially given the lack of sufficient consumer-focused support in the form of incentives," Tsoai said.

Additional reporting by Ismi Damayanti.

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