A game-changer has just rolled into town, none other than BYD – holding the title of no.1 global EV sales in 2023, with a reputation that precedes it, claimed as one of Warren-Munger' best investment. It is set to make waves in the automotive landscape- as well as the capital market!
Source: Kontan
Pre-booking is already available at a cost of IDR 5 mn, the official launch is scheduled in February at IIMS 2024. While the price remains undisclosed, here are the price range we've gathered so far...
Source: BYDIndonesia, various
Additionally, BYD has expressed plans to establish a factory in Indonesia this year, with an estimated capital expenditure of ~IDR 20 tn. This was confirmed by our Minister of Economics, Airlangga, in a video during the launch party.
Unlike other Chinese car brands, BYD took a measured approach in entering the Indonesian market, meticulously preparing for the right moment after gaining a thorough understanding of the market.
While several Chinese brands, including Wuling, DFSK, Neta and Chery eagerly penetrating the Indonesian market in 2017, BYD tested the market through partnership with Blue Bird taxis and DAMRI buses in 2018. As of 2023, 80% of Bluebird’s EV fleet is BYD, totaling ~400 units.
Source: Carnewschina
After operating as taxis for 5 years, some of the units have covered distances of up to 650,000 km and continue to demonstrate satisfactory performance. Their quality is thoroughly tested and validated, thus earning market trust becomes inherent for BYD!
From January to November 2023, electric car sales in Indonesia soared by an impressive 290% compared to the same period in 2022. Hybrid vehicles, particularly plug-in hybrid (PHEV) models, continued to dominate the market.
According to GAIKINDO data, electric car sales reached 60,287 units during these 11 months, marking a substantial yoy increase from 15,437 units. In terms of units sold, the Hyundai Ioniq 5 takes the lead with a 44% share. However, when considering market share based on brand, Wuling emerges as the winner with a total of 48%. As we can see, ASII was a bit late in the game, recently introduced their Toyota bZ4X later this year, with quite a hefty price tag at ~IDR1.2 bn.
Source: Sucor Sekuritas, Gaikindo
As of September 2023, Darmawan Prasodjo, the CEO of PLN, reported a total of of 846 EV charging stations (SPKLU) throughout Indonesia. Out of these, 620 are under PLN's ownership, while the remaining stations are held by Single Brand Holder agents, including Hyundai with 157 SPKLU, Mitsubishi with 17 SPKLU, and 52 SPKLU from other partners.
PLN is dedicated to fostering the growth of the EV ecosystem, aiming to steadily increase the number of SPKLU to 1,030 by the year 2023, in line with government incentives, projections aim the electric EV population to reach 335,000 units by 2030.
Source: ESDM
To support this growth, ~22,339 SPKLU will be needed for public EV charging. Although there is a substantial gap from the current numbers, an exponential growth observed in recent years reflecting the intense competition among various stakeholders eager to participate in the lucrative future of the EV ecosystem.
Government entities, local players, and major global corporations such as Medco, Astra Ottopwer, and others are actively engaging in this industry, offering diverse business models ranging from franchises to rental services.
I was in catching up with a friend who’s in the automotive industry, it became evident that profit margins from car sales are relatively consistent among all competitors. The key to generating recurring income lies in providing services such as oil changes and filter replacement, typically every six months, costing ~IDR 1.5-3 mn depending on the vehicle.
However, in the case of EVs, like the Hyundai Ioniq, the principal offers a complimentary 5-year maintenance warranty. Moreover, post this period, since EVs do not require oil changes- it cuts the recurring income all together!
This shift is transforming the automotive industry ecosystem, compelling all participants to adapt in order to secure a piece of the pie in the new automotive market dynamics. The notion of being "too big to fail" is challenged, as we've observed market shifts from larger brands like UNVR to smaller ones offering competitive pricing and enhanced value. A similar scenario could unfold for ASII if they fail to keep pace with the changing automotive landscape.
In essence, this is a game-changer. BYD's massive presence in Europe shifts the entire narrative. Time's ticking - once, Chinese cars were a rare sight outside China, now BYD is all over Europe, deeply rooted in its market.
We know some might argue EV’ growth in Indonesia would slow due to Indonesia's sparse charging stations? But in our opinion, it’s just a minor hiccup, not a deal-breaker. Easily scalable.
Bottom line - building the cars is the real challenge, isn't it?