Hyundai Indonesia recently announced that IONIQ 5 in 2022 will receive more than 1,400 local orders, while the total sales of electric vehicles in Indonesia in 2021 will only be 687, indicating that Indonesia's market share of electric vehicles has increased significantly; and seeing the potential of the Southeast Asian market, Hyundai spent $1.55 billion in March 2022 to set up a factory in Indonesia to focus on the production of IONIQ 5, which will also be the first time that IONIQ 5 will be produced outside of South Korea.
In addition to selling vehicles in Indonesia, the plant will also be exported to nearby Southeast Asian countries, hoping to use Indonesia's rich local production resources and low wages to enter the Southeast Asian market, which is currently dominated by Japanese automakers.
The new plant will focus on the production of electric vehicles, increasing the market share of electric vehicles in Indonesia
The Indonesian government has been promoting policies on the manufacture and sale of electric vehicles and plans to electrify the country by 2050. Therefore, Hyundai has locked in Indonesia's huge market of 270 million people, in addition to setting up a factory to produce electric vehicles, it has also cooperated with South Korean electronics giant LG to spend $1.1 billion to build a battery factory in Indonesia and start production in 2024, when all electric vehicles produced in Indonesia will use locally manufactured batteries.
Indonesian President Joko Widodo also expressed the hope that the development of electric vehicles in Indonesia will be accelerated through the IONIQ 5 produced in Indonesia.
It is rich in mineral resources and has low wages
Hyundai will choose to set up a factory and sell in Indonesia, in addition to having the world's fourth largest population market potential, the local also has a wealth of mineral resources, such as nickel, cobalt, aluminum and copper, which are the key raw materials for the production of electric vehicles; therefore, hyundai will be able to easily obtain the original ingredients for manufacturing electric vehicles after the establishment of a factory in Indonesia.
In addition, Indonesia's lower wages are also one of its advantages, with the local minimum wage only about 1/10 of South Korea's, and a 15% reduction in taxes if locally produced car parts are used and local workers are employed. Through the advantages of raw materials and wages, the electric vehicles produced by Hyundai in Indonesia will be more competitive in terms of price band and production volume in the future.
Focus on overseas market potential and increase the overall market share of modern Southeast Asia
At present, the southeast Asian automobile market is almost dominated by Japanese car manufacturers, more than 70% of the cars are Japanese brands, but most of the Japanese car manufacturers are mainly the production of fuel vehicles; and in the case of most Southeast Asian countries actively promoting electric vehicles, Hyundai is expected to enter the southeast Asian automobile market through electric vehicles produced in Indonesian factories, and increase the overall market share in Southeast Asia.