A study on the impact of rise in EV on conventional cars/ Case insights from Indonesia automobile market. FINAL PROJECT Prepared by: Muhammad Haikal Nadhif 19021044 Undergraduate Program School of Business and Management Institut Teknologi Bandung 2 A study on the impact of rise in EV on conventional cars/ Case insights from Indonesia automobile market. Muhammad Haikal Nadhif ID No. 19021044 Bachelor of Management School of Business and Management Institut Teknologi Bandung Supervisor : Annisaa Novieningtyas Abstract Indonesia, with it’s evolving economy and growing infrastructures, faces significant challenges in allocating transportation needs while at the same time cultivate on environmental concerns. The research will explore the aspects of vehicles, with a particular focus on electric vehicles (EVs) in Indonesia through a comprehensive review of existing literature, governmental policies, and industry reports, this study examines the current state of the automotive industry in Indonesia, highlighting key trends, challenges, and opportunities. It explores the factors that influence EV adoption in Indonesia, including as government incentives, infrastructural development, customer preferences, and technology improvements. Furthermore, the article examines the economic, environmental, and social implications of broad EV adoption in Indonesia. Despite challenges such as limited charging infrastructure, high upfront costs, and reliance on fossil fuels for electricity generation, Indonesia has a high potential for EV market growth due to its plenty supply of natural resources and strong government support for renewable energy initiatives. This paper concludes with recommendations for industry stakeholders, and researchers to promote the sustainable development and adoption of electric vehicles in Indonesia, thereby contributing to the country's efforts towards achieving a greener and more efficient transportation system. Keyword : Electric Vehicles (EVs) in Indonesia, Internal Combustion Engine Vehicles (ICEVs), EV Market Penetration, Government Incentive, EV Infrastructure, EV Upselling and ICEV Decline, Challenges in EV Adoption, EV Consumer Perception, Automotive Market dynamics. 3 Studi mengenai dampak kenaikan EV terhadap mobil konvensional/ Wawasan kasus dari pasar otomotif Indonesia. Muhammad Haikal Nadhif ID No. 19021044 Bachelor of Management School of Business and Management Institut Teknologi Bandung Pembimbing : Annisaa Novieningtyas Abstrak Indonesia, dengan perekonomian yang terus berkembang dan infrastruktur yang berkembang, menghadapi tantangan besar dalam mengalokasikan kebutuhan transportasi dan pada saat yang sama juga memperhatikan kepedulian terhadap lingkungan. Penelitian ini akan mengeksplorasi aspek-aspek kendaraan, dengan fokus khusus pada kendaraan listrik (EV) di Indonesia melalui tinjauan komprehensif terhadap literatur yang ada, kebijakan pemerintah, dan laporan industri. Penelitian ini mengkaji keadaan industri otomotif di Indonesia saat ini, dengan menyoroti tren, tantangan, dan peluang utama. Laporan ini mengeksplorasi faktor-faktor yang mempengaruhi adopsi kendaraan listrik di Indonesia, termasuk insentif pemerintah, pembangunan infrastruktur, preferensi pelanggan, dan peningkatan teknologi. Lebih lanjut, artikel ini mengkaji implikasi ekonomi, lingkungan, dan sosial dari adopsi kendaraan listrik secara luas di Indonesia. Meskipun terdapat tantangan seperti infrastruktur pengisian daya yang terbatas, biaya awal yang tinggi, dan ketergantungan pada bahan bakar fosil untuk pembangkit listrik, Indonesia memiliki potensi pertumbuhan pasar kendaraan listrik yang tinggi karena banyaknya pasokan sumber daya alam dan dukungan pemerintah yang kuat terhadap inisiatif energi terbarukan. Makalah ini diakhiri dengan rekomendasi bagi pemangku kepentingan industri dan peneliti untuk mendorong pembangunan berkelanjutan dan penggunaan kendaraan listrik di Indonesia, sehingga berkontribusi terhadap upaya negara menuju sistem transportasi yang lebih ramah lingkungan dan efisien. Kata Kunci : Kendaraan Listrik (EV) di Indonesia, Kendaraan Bermesin Pembakaran Internal (ICEVs), Penetrasi Pasar EV, Insentif Pemerintah, Infrastruktur EV, Peningkatan penjualan EV dan Penurunan ICEV, Tantangan Adopsi EV, Persepsi Konsumen EV, Dinamika Pasar Otomotif. 4 APPROVAL PAGE A study on the impact of rise in EV on conventional cars/ Case insights from Indonesia automobile market. By MUHAMMAD HAIKAL NADHIF ID No: 19021044 A Final Project in Partial Fulfillment of the Requirement for the Degree of Bachelor of Management Undergraduate Program of Management Study School of Business and Management Institut Teknologi Bandung August 13, 2024 Approved By __________________________ Dr. rer. pol. Achmad Fajar Hendarman, S.T, M.S.M. 5 Chapter 1 Introduction 1.1. Background Vehicles has become a very major needs especially in Indonesia. More than 750 thousand of new passenger cars were registered in 2022 (Statista, 2023). Car production itself also has a stunning record of approximately 1.4 million units which has a stunning 31% growth. It is also has been proven that automotive industry are one of the pillars for Indonesian economic growth (Gaikindo, 2019). The transition to electric automobiles has been pushed by government regulations all over the world in an effort to reduce emissions of carbon dioxide (CO2). The reduction of carbon dioxide emissions is one of the goals that Indonesia has set for itself. One of the attempt to reach the goal is to boost the usage of electric vehicles (EVs), despite the fact that there are significant obstacles in the areas of infrastructure, technological advancement, cost, and acceptance among users. Automotive industry has become more interesting for car manufacturers since the government of Indonesia are also slowly supporting them with infrastructure development such as toll roads and bridge construction. (Mahinda arkysasa, 2023). The electric vehicle (EV) is recognised as a critical technology for the future of automotive power in the automotive industry's roadmaps. electric vehicle has become a main focus for major global automakers, and it is projected to alter the road transport industry. 1.2. Problem Statement Electric cars (EVs) are gaining popularity quickly because of growing environmental concerns, technological developments, and government regulations that are supportive of them. This is causing a fundamental change in the worldwide automobile industry. For the market for conventional cars, however, the growing popularity of EVs offers both considerable potential and challenges. Conventional automakers have to navigate the competitive landscape that encompasses both new and existing businesses in the EV market while also adapting to shifting consumer needs, technology advancements, and 6 regulatory challenges. In addition, the growing popularity of EVs poses significant queries regarding the future of conventional vehicles in Indonesia, particularly with regard to market share, pricing policies, and customer behaviour. By analyzing market trends, consumer preferences, and industry responses, this research seeks to provide valuable insights into how the rise of EVs is influencing the conventional car market in Indonesia. The study will also examine potential future scenarios for the automobile industry, offering strategic recommendations for stakeholders to navigate this transitional period. 1.3 Research Objectives and questions Based on the research background, the research objective has been fixated on below : O1 : To examine the impact of consumer perceptions, driven by factors such as environmental awareness and rising fuel costs, on the demand for internal combustion engine vehicles (ICEVs) in Indonesia. O2 : To investigate the correlation between increased upselling efforts of electric vehicles (EVs) and the decline in sales of internal combustion engine vehicles (ICEVs) in the Indonesian market. O3 : To assess whether the upselling of electric vehicles in Indonesia has resulted in a measurable decrease in the sales of conventional combustion engine vehicles. And according to the objective stated above, a research question has been developed below in order to solve the required objectives above : Q1 : How do consumer perceptions of EVs, driven by factors such as environmental awareness and rising fuel costs, affect the demand for ICEVs in Indonesia. Q2 : What is the correlation between the increase in EV upselling efforts and the decline in ICEV sales in the Indonesian market.