Chinese Electric Cars Expected to Soon Localize Production in Indonesia

KatadataOTO – The incentives for imported electric cars provided by the government in the last two years have proven successful in popularizing the use of Electric Vehicles (EVs) in Indonesia.

Several Chinese brands have entered Indonesia using this scheme. As a result, Chinese electric cars can be sold at competitive prices even though they are still Completely Built Up (CBU) or fully imported.

All are required to start local assembly from 2026. This policy is expected to stimulate the entire automotive industry sector, including components.

However, the Association of Indonesian Automotive Parts & Components Industries (GIAMM) claims that many manufacturers have not yet maximized the use of local component suppliers.

Photo: KatadataOTO

Therefore, local assembly does not fully benefit suppliers in Indonesia.

Additionally, GIAMM revealed that of the 40 percent required Local Content Level (TKDN), the Completely Knocked Down (CKD) procedure itself already accounts for 30 percent.

“For electric cars, the government is also strongly encouraged to start localization by utilizing the existing domestic parts or component industry,” said Rachmat Basuki, Secretary General of GIAMM, to KatadataOTO recently.

Component localization is a crucial step in driving the growth of the national automotive industry.

Considering the component industry in Indonesia is said to have experienced a decline for three consecutive years.

For your information, manufacturers that have carried out local assembly and absorbed local components are Japanese brands.

One example is Toyota. The manufacturer with the T logo has partnered with 760 supplier companies, including Micro, Small, and Medium Enterprises (MSMEs).

The localization of components, including engine blocks in Toyota's vehicle lineup, ultimately raises the standards of national suppliers and reduces dependence on imports.

Photo: Wuling

On the other hand, Daihatsu has also utilized 1,700 suppliers, more than 700 MSMEs, and one million workers to support its vehicle production in Indonesia.

The Chinese manufacturer, Wuling, is committed to involving the local component industry for the assembly of its electric cars, such as the Wuling Air ev.

A similar step is expected from the lineup of Chinese car brands that want to operate in Indonesia for the long term, so they not only boost sales but also help develop the component industry.