(Sujun Kim) Final NationalSeminar ID Battery Industry Deloitte VF2

National Seminar
100 Tahun Industri Otomotif Indonesia
ACCELERATING xEV DEVELOPMENT

OPPORTUNITIES & CHALLENGES FOR ID’S ELECTRIFICATION
MARCH 7, 2023
Contents
01 Global xEV market
02 Key drivers & opportunities
03 The challenges
04 Conclusion
Copyright © 2023 PT Deloitte Consulting All rights reserved Accelerating xEV development: Opportunities & challenges for ID’s electrification 2
Global xEV market
Global xEV trend
Globally, electrified vehicle (xEV) has seen rapid development in past decade and expected to continue
accelerating, especially BEV
Global passenger xEV sales by drivetrain
(‘000 000 Unit)
Projection 100%
103 98
100 99
88% xEV penetration
90%
91 12
28 ICE
80%
80
80
73 42 73% 12 HEV
70%
16
FCEV
60%
60
58% PHEV
60
50%
18
40%
40 77 65
34% 72
BEV
30%
58
11
20 20%
35
11% 10%
5 16
3% 2
0 0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Notes: ICE = Internal Combustion Engine Vehicle; HEV = Hybrid Electric Vehicle; PHEV = Plug-in Hybrid Electric Vehicle; BEV = Battery Electric Vehicle; FCEV = Fuel Cell Electric Vehicle
Source: BloombergNEF
Key market for xEV
China, Europe and US currently dominates EV market, but the rest also follow suit, including SEA
Global passenger EV* sales by key economy

(‘000 000 Unit)
80 Projection 120%
China + Europe + US
100%
95% 95% 21
Rest of the world
60
87%
Southeast Asia
11
79% 80%
3
68%
US
11 12
40 60%
5
8
15
16 Europe
40%
(inc. UK & EFTA)
20 11
3
20%
8
21 22 China
16
9
2
1
0 0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
*EV includes BEV, PHEV and FCEV
xEV development in ASEAN
Within SEA, TH is projected to be largest xEV market for short term, and ID will overtake by ~2035
Southeast Asia passenger xEV sales by drivetrain Southeast Asia passenger xEV sales by market
(‘000 000 Unit) (‘000 000 Unit)
5 Projection 90% 4 Projection 80%
80%
xEV
78% Penetration Thailand
60%
4 70%
ICE 3
Rest
40%
of SEA
60% 60%
3 HEV
50%
2 Malaysia
20%
PHEV
40%
2
29% 30% 0%
Indonesia Thailand
1
1 BEV
20%
-20%
10% 10% Indonesia
3%
0 1% 0% 0 -40%
15 017 019 021 023 025 027 029 031 033 035 037 039 15 017 019 021 023 025 027 029 031 033 035 037 039
20 2 2 2 2 2 2 2 2 2 2 2 2 20 2 2 2 2 2 2 2 2 2 2 2 2
Notes: ICE = Internal Combustion Engine Vehicle; HEV = Hybrid Electric Vehicle; PHEV = Plug-in Hybrid Electric Vehicle; BEV = Battery Electric Vehicle
Key drivers & opportunities
Key drivers to xEV development
1 2 3 4
Decarbonization & Incentive policy to make Shift in customer Battery price &
CN commitment xEV affordable preference technology development
Countries globally target Incentives help to make xEV Potentially lower running cost Declining battery price and
transport electrification as one more affordable and accelerate and other benefits attract technology improvement also
of decarbonization strategies to market demand customers to adopt xEV help make xEV more affordable
achieve net zero emission and more feasible
Global commitment on carbon neutral & electrification
Decarbonization &
Many countries have set electrification as key decarbonization strategy to achieve Carbon Neutral. CN commitment
ID Govt also considers BEV target and ICE phase-out as part of emission reduction milestones.
EU-27
Canada Net-Zero Emission Target: 2050
Net-Zero Emission Target: 2050 • 100% Light-duty ZEV sales by
• 100% Light-duty PEV sales by 2035
2035 China
Net-Zero Emission Target: 2060
• 20% PEV sales by 2025
USA
Net-Zero Emission Target: 2050
• 50% Light-duty ZEV sales by Thailand
2030 Net-Zero Emission Target: 2050 (CO2 only)
• California - 100% ZEV sales by • 25% of production is xEV by 2036 (as of 2017)
2035 • 30% of production is ZEV by 2030 (as of 2021)
• New York – 100% PEV sales by
2035
UK Indonesia
Net-Zero Emission Target: 2050 Net-Zero Emission Target: 2060
• 100% Light-duty xEV sales by • 1mio BEV production by 2035
2030 India • 2mio BEV and 13mio e-2Ws
• 100% Light-duty ZEV sales by Net-Zero Emission Target: 2070 UIO by 2030
2035 • 30% Light-duty EV sales by 2030
• 100% ZEV sales by 2040 • 100% ZEV sales by 2050
• State of Assam - 25% BEV sales by 2026
• Delhi - 25% BEV sales by 2024
Notes: in italic indicates verbal commitment only/ under consideration (no legislation/ regulation); ZEV = Zero Emission Vehicle; PEV = Plug-in EV; xEV = all Electrified Vehicles (inc. Hybrid)
Source: WRI, ICCT, Climate Action Tracker
Government incentive policy
To promote xEV adoption, Govt usually provide incentive to make xEV price more attractive to market
Incentive policy
to make EV affordable
Incentive scheme as of 2022
China Thailand Indonesia
Types HEV PHEV BEV Types HEV PHEV BEV Types HEV PHEV BEV
Market Cash subsidy * ** ** Excise tax reduction Luxury tax reduction/ * *
incentives exemption
Purchase Tax Import tax reduction *
Exemption Vehicle tax**
Direct subsidy **
reduction/ exemption
Non-fiscal
incentive*** Non-fiscal incentive
Non-fiscal incentive***
*For CBU, this is only applicable for 2022-2023. For
*Subsidy scheme was given to HEV prior to 2010 but CKD, it is given until 2025
has since ended *Tax rate will be slightly increased when BEV
**Ceiling price of THB 2mio applies; effective 2022 - investment has reached IDR 5 tio
**Govt has since 2017 starting subsidy phase-out and 2025
it will no longer available from 2023 onward **Refer to PKB and BBNKB; vary depends on
***e.g. free license plate, parking benefit, priority regional Govt policy
road access, etc. ***e.g. access to odd-even zone, free parking, etc.
Types HEV PHEV BEV Types HEV PHEV BEV Types HEV PHEV BEV
Production Additional 50%
incentives N/A reduction on excise tax N/A
(Govt require production & technical standard (Govt require production & localization to be
CIT exemption *
fulfillment to be eligible for subsidy) eligible for Luxury Tax reduction incentive)
*It was provided to HEV production investment prior Notes: There is pioneer-industry based investment
to 2020 incentive (i.e. CIT exemption), however this is not
limited to xEV
*HEV = Hybrid Electric Vehicle; PHEV = Plug-in Hybrid Electric Vehicle; BEV = Battery Electric Vehicle; CIT = Corporate Income Tax
Source: Journal of Energy Policy, ICCT, IEA, Thailand BOI, Indonesia MOI, various public sources
Customer preference on xEV
Market interest on xEV is growing.
For ID particularly, there has been significant interest shift to HEV and PHEV.
Preference for type of engine in next vehicle
(% Share of Total Respondents) Shift in customer
US China Southeast Asia Thailand Indonesia preference
2023 36% 2023 53% 2023 45% 2023 2023

60% 40%
xEV 2022 27% 2022 40% 2022 31% 2022 46% 2022 19%
2021 21% 2021 40% 2021 30% 2021 43% 2021 24%
2023 28% 2023 26% 2023 32% 2023 29% 2023 31%
HEV
& 2022 22% 2022 23% 2022 26% 2022 35% 2022 17%
2021 16% 2021 29% 2021 24% 2021 29% 2021 20%
PHEV
2023 8% 2023 27% 2023 13% 2023 31% 2023 9%
2022 5% 2022 17% 2022 5% 2022 11% 2022 2%

BEV
2021 5% 2021 11% 2021 6% 2021 14% 2021 4%
xEV = all Electrified Vehicle; HEV = Hybrid Electric Vehicle; PHEV = Plug-in Hybrid Electric Vehicle; BEV = Battery Electric Vehicle
Source: Deloitte Global Automotive Consumer Survey
Expectation of lower cost benefit
In choosing EV, lower fuel cost and less maintenance are among the key expectations for ASEAN customers,
inc. Indonesia, and less about environmental reason
Top reasons to choose an EV as next vehicle
Factors US China Southeast Asia Thailand Indonesia Shift in customer
preference
Lower fuel costs 1 2 1 1 1
Better driving experience 2 1 2 2 2
Ability to use the vehicle as a backup battery /
power source (e.g., for home) 8 3 4 4 3
Less maintenance 4 7 3 3 4
Government incentives / subsidies / stimulus
programs 5 6 5 8 5
Potential for extra taxes/levies applied to internal
combustion vehicles 6 5 8 7 6
Concern about personal health 7 4 7 6 7
Concern about climate change 3 8 6 5 8
Peer pressure 9 9 9 9 9
Q. Please rank the following factors in terms of their impact on your decision to acquire an electrified vehicle (highest to lowest).
Sample size: n = 374 [China]; 2,305 [Southeast Asia]; 618 [US]
Source: Deloitte 2023 Global Auto Consumer Survey (GACS)
Battery price & demand
Battery declining price will make xEV more affordable, especially for price-sensitive market like ASEAN.
Growing battery demand will also aid ID to develop its battery industry utilizing domestic resources.
Global lithium-ion battery prices (US$/kWh) vs. battery demand (GWh) by EVs World nickel reserves by country (‘000 000 tons)
1,400 2,500
Indonesia 21.0
Battery price
& technology
1,2001191
2,045 2,000 Australia 19.0
Li-ion Battery Demand
1,000
Brazil 11.0
Li-ion Battery Price 1,500

US$/kWh
800 Russia 7.6
GWh/year
600 Cuba 5.5
1,000
400 Philippines 4.8
500
426 South Africa 3.7
200
151
94
62 Others 15.9
0 -
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Source: BloombergNEF, IEA, US Geological Survey (2019)

Battery performance
Thanks to battery technology advancement, average driving range has seen improvement over years.
Electric car models available globally and average range, 2020
350 400
Battery price
350 350 & technology
300
292
300
Driving range (kms)

250
No. of models
250
200
211
200
150
158
150
100
100
50 62
53 50
0 0
2015 2016 2017 2018 2019 2020 2021
BEV PHEV BEV range PHEV range
Source: IEA, Bloomberg

The challenges
15
Price-sensitive market & low purchase power
Majority vehicle sales are in segments below USD 30k in Indonesia. As emerging countries, majority ID
customers are still not able to afford xEV at current price level, and models are limited.
ID vehicle model sales & price*, 2022
(USD ‘000) Considerations
ICE HEV PHEV BEV Segment

100
Bubble size indicates sales volume (‘000 Unit) • How do we make xEV
10 Mitsubishi affordable to majority ID
Outlander Hyundai customers?
Ioniq 5 D
• How to bring more xEV models
Nissan & Above
50 Toyota Leaf Hyundai into the market to reach out to
Corolla Cross Kona different market segment?
40 Toyota
Toyota
Innova Zenix
Fortuner
30
Nissan Volume Zone C
Kijang Wuling Kicks (<USD30,000)
Innova Almaz
Toyota Raize Mitsubishi
Wuling
20 Xpander Toyota
Rush Air EV B
Toyota
Honda
Toyota Avanza
Brio
10 Daihatsu Calya
Sigra A
Daihatsu Alya
0 A+B+C
Market
*Retail price of the best-selling variant for each model; 1 IDR = USD 14580 Share
>60%
Source: Gaikindo, each OEM website, public sources, Deloitte Analysis
Customer concern & low awareness
Customers still have concerns on charging infrastructure and lack awareness on cost/ premium as well as
current xEV driving range capability
Key concerns regarding all battery-powered electric vehicles
Considerations
Lack of public electric vehicle charging infrastructure 62.7%
Time required to charge 53.5%
Driving range 47.6%
• Why are customers having those
concerns? Is it an issue of
Safety concerns with battery technology 44.0%
lacking knowledge on xEV and
Ongoing charging and running costs 43.5% battery technology?
Lack of knowledge or understanding about EVs/EV technology 41.8%
• How to address charging
Cold weather performance 41.6% infrastructure concern,
Lack of charger at home 40.2% especially with ID vast
Uncertain resale value 34.1% geographic landscape? Should
Cost/price premium 31.8% we consider some short-term
alternatives?
Potential for extra taxes/levies associated with all-BEVs 27.5%
Lack of sustainability 27.3%
Lack of alternate power source at home 24.9%
Increased need to plan my trips 18.5%
Lack of choice 15.6%
Other 0.5%
Don’t know 0.4%
Source: Deloitte 2023 Global Auto Consumer Survey (GACS)

Evolving battery technology
Access to different technology and keeping up with latest technology require cost.
This will be a challenge for Indonesia’s battery industry as newcomer to be competitive.
Evolution of battery cathode chemistry & outlook (Passenger EV)
Considerations
100% LMFP
6% 8% 9% 7%
11% 0.12 0.12 0.12 LFP
16%
13% 7% 6% LNMO • Do we have access to relevant
5%
80% 0.08 37% LMO and latest technology? Do we
27% eLNO have the capability to comply
25% 26% 25%
26% 25% 25% NCA95 with requirements from xEV
26% 15%
NCA92 makers?
60% 0.06 0.04 NCA90 • How to make battery produced
0.06 0.08
5% 0.1 0.05
0.05 0.06
NCA85 in Indonesia to be and stay
7% 8% 13% 0.05
0.07 0.06 NMCA competitive?
5% 0.06 0.04 0.08
35% 0.03 0.08
LMR-NMC • Any strategy/ plan to strengthen
40% 15% 53% 0.18 0.09 NMC (96Ni) technology R&D capability and
0.13 0.07
26% NMC (955) develop industry supply chain?
33% 0.06 0.1
0.05 NMC (721)
20% 43% NMC (811)
17% 0.06
31% 17% 0.12 0.15
NMC (622)
19% 0.16 NMC (532)
10% 7% 10% 0.03
8% 11%
4% 0.06 NMC (111)
0%
2015 2016 2017 2018 2019 2020 2021 2025 2030 2035
Limited raw materials
Raw materials, particularly Lithium, are limited and not available in ID; there might be risks of material
shortage and price surge given the rapid EV growth expected
Lithium supply vs demand
Considerations
• Do we have access to all

materials required to produce
battery locally?
• How can we mitigate any risks
in the case of price surge or
shortage?
Source: Benchmark Mineral Intelligence, various public sources

Battery utilization
Diversification of electrified vehicles (xEV) can potentially help to optimize CO2 reduction given the limited
lithium battery resources that we have
Battery capacity utilization vs CO2 reduction impact Lithium Battery
100 kWh
Considerations
Required • How to maximize carbon

Battery 100 kWh 18 kWh 1.1 kWh emission reduction while
per BEV per PHEV per HEV
Capacity effectively and efficiently utilize
(per unit)
such limited raw materials for
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● battery?
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Fleet Mix ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
(Total 100 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Unit) ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
100 ICE 1 BEV + 99 ICE 6 PHEV + 92 ICE 90 HEV + 10 ICE
250 248.5 ▼1.5gr/km 244

Fleet CO2 ▼6.0gr/km
205
(0.6%) (2.4%) ▼45gr/km
Reduction (18%)
Impact
(gr/km)
Source: Gill Pratt – Toyota Research Institute

Fossil Energy still in the Electricity Mix for short term
With fossil energy portion, especially coal, in electricity mix still high, pushing for BEV may not really help
on emission reduction
Electricity energy supply mix 2030 (based on PLN Electricity Development Plan)
Share of total energy (%) Considerations
12% RE 24% RE
0.8 4.3
5.8 Other RE* • Shall we consider multiple
8.2 Geotherm
5.8
1.4 Sola
al options in this short-term
9.6 rHydr transitional period to help Govt’s
16.6
o target to decarbonize?
3.9 15.4
Ga
• How can we maximize xEV
sOi
1.3 development to contribute to
l emission reduction without
Fossil adversely impacting existing
Energy industry?
67.0 Coa
59.4
l
2021 2030
*Other RE includes Biomass, Bioenergy + CCUS, Nuclear, Hydrogen & Ammonia

Source: MEMR, RUPTL 2021-2030, Deloitte Analysis
Conclusion
22
OPPORTUNITY DRIVERS & Challenges
<Thailand>
CHALLENGES • Price-sensitive Market & Low Purchase Power
• Set low entry barrier to
Still at nascent stage, xEV development in ID will • Customer Concern & Low Awareness accelerate ecosystem
development
need careful consideration of challenges in setting • Limited Battery Raw Materials • Support all technologies to
the path for xEV development • High Fossil Energy in Short-term Energy Mix maximize CO2 emission
reduction
. Decarbonization &
1 Deloitte’s perspective: Many roads lead to Rome
CN commitment
While acknowledging that Indonesia has huge potential for battery
industry development, it is still at very early stage of the
Govtincentive to make development
2 xEV affordable
Opportunity To accelerate the ecosystem development, ID need to be flexible and
Global & domestic open to as many potential options as possible and have transitional/
Shift in customer xEV market growth progressive plan.
3 preference
Primary objective is CO2 emission reduction. BEV is the direction
Battery price & toward the future. However, for short term, it is not everything and
4 technology not the only way to contribute to emission reduction
development
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National Seminar

100 Tahun Industri Otomotif Indonesia

ACCELERATING xEV DEVELOPMENT

01 Global xEV market

02 Key drivers & opportunities

Global passenger EV* sales by key economy

5 Projection 90% 4 Projection 80%

2023 36% 2023 53% 2023 45% 2023 2023

2022 5% 2022 17% 2022 5% 2022 11% 2022 2%

Li-ion Battery Price 1,500

800 Russia 7.6

400 Philippines 4.8

Source: BloombergNEF, IEA, US Geological Survey (2019)

Electric car models available globally and average range, 2020

Driving range (kms)

Source: IEA, Bloomberg

ICE HEV PHEV BEV Segment

Source: Deloitte 2023 Global Auto Consumer Survey (GACS)

• Do we have access to all

Source: Benchmark Mineral Intelligence, various public sources

Required • How to maximize carbon

100 ICE 1 BEV + 99 ICE 6 PHEV + 92 ICE 90 HEV + 10 ICE

250 248.5 ▼1.5gr/km 244

Source: Gill Pratt – Toyota Research Institute

*Other RE includes Biomass, Bioenergy + CCUS, Nuclear, Hydrogen & Ammonia

About Deloitte Indonesia

© 2023 PT Deloitte Consulting

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