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Indonesia Electric Vehicle Outlook 2023 Foreword Decarbonizing Transport In 2018, the transport sector contributed to 28% of Indonesia's energy sector emissions, and it is rapidly increasing. Emissions from the transport sector are expected to rise by 53% from 2015 levels by 2030, and nearly double between 2030 and 2060. Achieving net-zero emission will not be possible without addressing fossil fuel combustion in the transport sector. Today, electric vehicles is seen as one of technology for the decarbonization of road transportation. Electric vehicle sales have increased exponentially in recent years, with improved range, performance, and model. BNEF forecasts that global sales of EVs will reach a record of 10.6 million vehicles in 2022, despite supply chain bottlenecks and inflation. This is an increase of nearly 60% over last year. EV sales are expected to reach 21 million by 2025. Electric vehicles have been included in the mitigation action of our country. To meet the emission reduction target under Indonesia's Nationally Determined Contribution (NDC), 2-electric wheelers must reach 1.8 million by 2025 and 13 million by 2030, while 4-electric wheelers must reach 0.4 million by 2025 and 2 million by 2030. However, this target is still far from meeting the Paris Agreement's 1.5°C warming target. According to the IESR study, in order to do so, EVS must reach 110 million E2WS and E4Ws by 2030, followed by 3 million Low Duty Vehicles (LDV) and 2.4 million buses. It is an ambitious target, but one that must be met if we are to wean ourselves off fossil fuels. To achieve this, the government must direct its efforts toward creating an enabling environment for the adoption of electric vehicles. Many countries begin with a clear target, supported by policies to increase demand for EVs, develop their infrastructure, gradually develop manufacturing by strengthening supply chains, and push for mass adoption. The latter has proven to be successful in Indonesia. Indonesia has been able to gradually build a supply chain based on nickel processing to produce batteries since the enactment of the Presidential Regulation No. 55/2019. This strategy has attracted EV battery and manufacturer companies to locate their manufacturing facilities in the country. If everything goes according to plan, we could see the first Indonesian-made EV battery by 2024. Hopefully, more domestic E2W, E4W, and E-bus production will follow. Upstream focus alone will not transform EV demand. Since EVs are a newer technology, they compete with internal combustion engine vehicles. To change consumers' preferences, the government must make EVs more appealing, particularly in terms of economics. Consumers evaluate the costs, benefits, monetary gains, and convenience of any decision they make. The logic will differ depending on the type of vehicle. In our case, E2W offers a better chance of rapid transformation than E4W. By focusing on enabling policies and incentives for E2W, consumers' preference for electric vehicles could be unlocked. Aside from the policy and regulatory framework for EVs, the government should avoid making policies that encourage the use of internal combustion engines. Unfortunately, policy inconsistency occurs, as evidenced by the tax incentive provided to consumers to purchase an ICE vehicle during the pandemic, as well as the continuation of fuel subsidies. The government must make the difficult decision to go in one direction rather than pursue two competing goals. If we want to successfully decarbonize the transportation sector, we must adopt a no-regrets policy. So here it is, IEVO 2023 as one of IESR's flagship reports. IEVO intends to track and monitor the progress of the energy transition in the transportation sector. This report is our contribution to raising awareness and understanding among all stakeholders, as well as shaping priorities and policy enhancements of actions toward transportation decarbonization to meet the net-zero emission target by 2050. IESR thanks all partners and collaborators to make this report available. February, 21st 2023 Fabby Tumiwa Executive Director IESR M

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