Hyundai leads Indonesia’s EV push with locally produced IONIQ 5

Hyundai Motor Co. has emerged as Indonesia’s top electric vehicle seller, driven by its locally produced flagship model, the IONIQ 5, as the South Korean carmaker works to crack Japan's dominance in the Southeast Asian auto market.

Hyundai achieved the feat in just a year, since it began producing the electric crossover at its newly built plant in the Deltamas industrial complex in Bekasi Regency, about 40 km east of Jakarta.

The IONIQ 5 is the first foreign model locally produced in the country.

In the first seven months of this year, Hyundai sold 3,913 EVs in Indonesia, garnering 56.5% of the country’s EV market, according to GAIKINDO, Indonesia’s automobile association.

China’s Wuling Motors came in second by selling 1,944 units for a 28.1% market share, followed by Japan’s Toyota Motor with 363 cars for a 5.2% share.

In 2022, Wuling was the top EV seller in Indonesia with 8,053 units, followed by Hyundai with 2,208 units.

At the opening ceremony for Hyundai’s Deltamas plant last year, Indonesian President Joko Widodo said: “The IONIQ 5 will be an important milestone for the development of Indonesia’s electric vehicle ecosystem.”

CRACKING JAPAN’S MONOPOLY

Hyundai has been ramping up its Indonesian business to crack the Indonesian market dominated by Japanese carmakers such as Toyota and Honda, which have long reigned as undisputed champions with their names on more than eight out of every 10 passenger cars sold in the country.

Hyundai Motors Indonesia (HMID), the Korean carmaker’s local sales company, ranked 13th with sales of 3,005 cars in 2021 and quickly moved up to eighth with 31,965 units in 2022.

In the January-July period of this year, it sold 20,065 cars, up 48.1% from a year earlier, to rank sixth.

Still, Hyundai has a lot of catching up to do in Indonesia. Japanese carmakers, including Toyota, Daihatsu, Honda, Suzuki and Mitsubishi, are all ahead of it in rankings.

In the first seven months of the year, the five Japanese carmakers controlled a combined 82.2% of the Indonesian market, with Toyota leading the pack with a 32.5% share. Hyundai’s market share stood at 3.4%.

Industry watchers, however, said that Hyundai is gradually cracking Japan's dominance by launching a series of new vehicles.

At the Gaikindo Indonesia International Auto Show (GIIAS), the country’s largest auto show, held in mid-August, Hyundai showcased the IONIQ 6, its latest electric sedan, and the Stargazer X, the high-performance version of the Stargazer, a small multi-purpose vehicle (MPV) strategically designed for the Indonesian market.

During the event, Hyundai sold 3,727 cars, including the Stargazer, IONIQ 5 and the Creta subcompact SUV, on the site, just behind Toyota, which sold the most with 5,796 cars.

DELVE INTO ASEAN MARKET

Hyundai said Indonesia is its manufacturing hub in the region for its advance into the broader Association of Southeast Asian Nations (ASEAN) market.

According to GAIKINDO, Hyundai’s Indian operations exported 30,114 units to ASEAN and neighboring countries in the January-July period, up 70% from the year-earlier period.

The size of the ASEAN auto market stood at 1.63 million units in the first half, up 1.2% from a year earlier, data from the ASEAN Automotive Federation showed. The market is forecast to grow to 3.42 million by year-end.

The world’s fourth most populous country with 270 million people, Indonesia accounts for more than a third of car sales in the ASEAN market.

Indonesia has ample mineral resources such as nickel and cobalt, key raw materials for EV battery production. It is the world’s top nickel producer with the largest reserves.

To secure a stable supply of battery cells, Hyundai has forged a partnership with LG Energy Solution Ltd. to build a $1.1 billion battery plant in Karawang, Indonesia.

The factory will begin commercial production in the first half of 2024 with an annual capacity of 10 GWh of battery cells, enough for over 150,000 EVs.

BUILDING EV CHARGING SYSTEMS

Hyundai is also actively building an EV charging infrastructure across Indonesia.

The company said on Tuesday HMID has signed an initial agreement with Lippo Malls Indonesia, the distribution unit of property conglomerate Lippo Group, to jointly install 52 charging stations at Lippo Malls.

Hyundai said it will build more charging stations throughout the country over the years.

The Indonesian government has been offering generous tax incentives for global automakers to expand the country’s EV penetration rates, with at least one in five vehicles running on its roads to be electric by 2025.

Write to Il-Gue Kim at Black0419@hankyung.com

In-Soo Nam edited this article.