Socioeconomic Impacts and Consumer Preferences Analysis of Electrified Vehicle in Indonesia

Abstract

Electrified vehicles (EV) entry to the Indonesian automotive market at the moment is relatively new, with market penetration being modest at best. This study discusses two major socioeconomic aspects of EVs in their early ventures in the country. First, we examine the feasibility and the impact of accelerating the development of electric cars in Indonesia in economic, environmental, and fiscal aspects. Second, we use primary data analysis by conducting users and prospective car users in the Greater Jakarta area to elicit the consumers’ preferences for electric cars. In this analysis, we specifically estimate the necessary price incentives for each of the EV types, i.e., Hybrid Electric Vehicles (HEV), Plug-in Electric Vehicles (PHEV), and Battery Electric Vehicle (BEV), to gain certain market exposure in the country. We also utilize simulation method in estimating the impacts of various scenarios of policies in accelerating the use of EV vehicles on the automotive industry market and the automotive component industry, as well as government (fiscal), environmental (CO2 emission reduction) and macroeconomic revenues. Our findings suggest that considerable amount of price and non-price incentives is needed to encourage Indonesian consumers to consider EVs compared to ICE. On the environmental and fiscal perspective, we find PHEV serve as the better vehicle to be introduced into the country’s automotive landscape, with a prudent mixture of the three aforementioned EV being also a viable option.