Factors Behind the Popularity of Chinese Electric Cars in Indonesia

“We can see a recurring trend; market penetration always starts with low prices because people are not yet familiar with the product,” said Yannes.

This strategy was also employed by BYD. When it first entered Indonesia, three models were offered with prices starting from Rp 300 million.

Then its luxury sub-brand, Denza, introduced an electric-powered family car in the premium segment for Rp 950 million. This figure is below its rival, the Toyota Alphard HEV, which is offered at Rp 1.7 billion.

“What we need now is the integration of government policies and a massive domestic scale,” said Yannes.

Photo : Denza

The Impact of Price Competition

Chinese electric cars are popular domestically due to their lower price tags compared to most other manufacturers. Some Chinese brands even dare to lower their prices to attract consumers.

However, in the long run, a price war can have negative impacts on both the industry and consumers.

When manufacturers lower their selling prices, Yannes emphasized that the brand's profit margins will be directly eroded.

Photo : Courtesy

“This profit is crucial for long-term investment in R&D (Research and Development), expansion of the dealer network, improvement of after-sales service quality, and future innovation,” said Yannes on a separate occasion.

He stressed that there is a risk of manufacturers cutting costs on crucial aspects such as material quality and safety features. Meanwhile, from the consumer's perspective, there is a high chance that the resale value of the vehicle will plummet.

“Ultimately, it will harm consumers and the industry's reputation globally,” Yannes stated.