Micro, Small, and Medium Enterprises (MSMEs in the automotive industry are considerably ready to produce components for electric vehicles (EVs), yet confronted  with some challenges that need to be addressed.

President of the Indonesian Automotive Institute (IOI), I Made Dana Tangkas, said that the biggest challenges for MSMEs, included the high prices of two-wheeled and three-wheeled electric vehicles, the technology that still relies on imports, and inadequate infrastructure.

"The challenges ahead are that the prices of two-wheeled and three-wheeled electric vehicle products are still expensive because the batteries and the main technology are still 40 percent − 50 percent of the selling price," Made said on Friday, March 8, 2024.

Not only that, the three main technologies of electric vehicles such as batteries, traction motors or dynamos, and inverters still depend on imports, most of which are from China. Moreover, the number of supporting infrastructure for electric vehicles, especially charging stations, is still minimum.

"Not all of the infrastructures have evenly been distributed, so they need to be developed, especially charging stations. The charging stations should be ready with 3,000−5,000 watts," he said.

However, Made is optimistic that the technology capabilities of suppliers to produce components outside of electric vehicles are already sufficient. On the other hand, he welcomed the Ministry of Cooperatives and SMEs' plan to roll out Rp2 trillion (US$135.4 million) in funds from the Revolving Fund Management Agency (LPDB) to MSMEs in the automotive industry to produce EVs.

"That will be huge. If it's only for production scale, let's say between 10,000 − 20,000 units, it doesn't have to reach Rp2 trillion, Rp100 billion is enough, especially for two and three-wheelers," he concluded.

Minister of Cooperatives and SMEs Teten Masduki said the funds would be allocated through a Multi-Party Cooperative that would combine MSMEs producing automotive components with investors. The technical aspects of rolling out LPDB funds for EV production will be coordinated again.

"If our cooperatives are developed into Multi-Party Cooperatives, then we also have a revolving fund of Rp2 trillion per year if we want to exercise to produce electric vehicles," Teten said on March 8, 2023.