Indonesia tax cut drives electric car sales for Hyundai, Wuling

Wuling Motors Holdings

10/05/2023 09:44

By Bernadette Christina and Stefanno Sulaiman
       JAKARTA, May 10 (Reuters) - Sales of electric cars in
Indonesia jumped last month after the government launched tax
incentives, auto executives said, in an early sign that electric
vehicle (EV) adoption is gaining traction in Southeast Asia's
largest economy. 
    Effective from April, Indonesia cut the value-added tax
(VAT) on electric cars from 11% to just 1%, provided they are
manufactured with at least 40% local content.  
    Hyundai Motor Co's  005380.KS  sport-utility vehicle IONIQ
5, a model eligible for the tax cut, saw sales jump three-fold
to more than 600 units in April compared with the previous
month, Sanghoon Yoon, an executive with Hyundai Motor ASEAN told
Reuters on the sidelines of a seminar on energy transition in
Jakarta.
    "At the moment EVs are very expensive because of the
battery," Yoon said on Tuesday. "So I think in the beginning we
need a kind of subsidy from the government and it will increase
the demand for EVs."
    Hyundai aims to sell 10,000 units of IONIQ 5 in Indonesia
this year, helped by the tax cut and as a shortage in
semiconductor chips eases, he said. 
    That compares with 3,000 units sold since the model was
launched in 2021.
    Sales of Wuling Air EV, a small car manufactured by SGMW
Motor Indonesia, part of a joint venture (JV) that includes
Chinese firm Wuling Motors Holdings  0305.HK , surged by more
than 80% on a monthly basis to more than 740 units, said Dian
Asmahani, marketing director for the Indonesian arm of the JV.
    The two models are the most popular electric cars in
Indonesia.
    Hyundai's Yoon said the South Korean company plans to
introduce more battery-EV models in Indonesia to capture the
growing market.
    Fitch Ratings said in February sales of four-wheeled EVs,
including hybrid models, in Indonesia is expected to exceed
50,000 units in 2023, up from 20,681 units last year, noting
that government incentives could provide potential upside to the
forecast.

 (Reporting by Stefanno Sulaiman and Bernadette Christina;
Writing by Gayatri Suroyo; Editing by Kanupriya Kapoor)
 ((Stefanno.Sulaiman@thomsonreuters.com;))