Arya News - Indonesia’s bid to mass-produce cars of a homegrown brand in 2027 is “highly ambitious”, experts say, noting that an electric vehicle model would require sustained fiscal outlays and far stronger technical competencies than the country currently possesses.
JAKARTA – Indonesia’s bid to mass-produce cars of a homegrown brand in 2027 is “highly ambitious”, experts say, noting that an electric vehicle (EV) model would require sustained fiscal outlays and far stronger technical competencies than the country currently possesses.
State-owned defense manufacturer PT Pindad, tasked with developing the project, signed a memorandum of understanding (MoU) with the National Development Planning Ministry (Bappenas) on Thursday to establish an industry ecosystem, conduct joint research and build human-resource capabilities.
National Development Minister Rachmat Pambudy said in a statement that, strengths and weaknesses aside, the country “has now taken the leap” to developing a national car prototype, a project that Pindad would carry forward.
Read also: Indonesia to build ‘national car’ within three years: Prabowo
President Prabowo Subianto had tasked Pindad with manufacturing the so-called “national car” in a bid to accelerate domestic industrial capabilities and curb foreign dependence.
Over the past year, Prabowo has been using Pindad’s Maung MV3 “Garuda”, a civilian version of its light tactical military vehicle that has since been developed into several variants.
The company in June launched an electric version, the “Pandu EV”, which uses a nickel-manganese-cobalt (NMC) battery.
Coordinating Economy Minister Airlangga Hartarto said on Dec. 1 that the government aimed to position the national car in the country’s mass-market segment, dominated by models priced below Rp 300 million (US$18,500), in order to have a chance of gaining scale.
“The President has instructed us to set aside a budget for developing the national car, so we’ll be pushing this program forward,” said Airlangga.
“We’ve checked with [the Association of Indonesian Automotive Manufacturers] Gaikindo […], which is why the government is pushing in that segment. Affordability is a major challenge,” he added.
Pindad would develop the car’s main base, which could later be supported by other brands, Airlangga said.
Several global automakers have reportedly expressed interest in contributing technology or components, but the minister stressed that any formal announcements “must come directly” from the companies.
In early November, he pointed to Hyundai Motors as one potential partner, noting that the Korean automaker was keen to support the country’s EV ambitions and was ready to produce vehicles with more than 80 percent local content.
Japan’s Toyota and China’s Chery have also reportedly signaled their willingness to participate.
Industry Ministry secretary general Eko Cahyanto told The Jakarta Post on Thursday that Indonesia should build its domestic capabilities through Pindad “rather than relying on joint-development arrangements.”
Industry Minister Agus Gumiwang Kartasasmita told reporters on Nov. 13 that the ministry had begun holding intensive early-stage coordination meetings with Pindad and had discussed the project’s funding, technology roadmap, as well as marketing plans and after-sales service.
“Pindad has submitted a solid early plan. The ministry and Pindad already share an understanding of how to achieve the President’s directive,” Agus said.
While the government has outlined the project’s broad direction, now included on the strategic national projects (PSN) list, it has yet to spell out what would qualify as a “national car”, including the minimum local content threshold.
The thresholds vary across auto segments, with EVs starting at 40 percent and expected to reach at least 80 percent by 2030, while vehicles under the low-cost green car (LCGC) program were once required to meet an 80 percent threshold.
Read also: NMC-over-LFP mandate could rattle EV investors
Experts skeptical of timeline, capability
Tauhid Ahmad, senior economist of the Institute for Development of Economics and Finance (Indef), told the Post on Friday that the government needed to set out a long-term research and financing strategy to support its early stages; “otherwise it just won’t move.”
“The fiscal needs will be enormous, and injections, both direct and indirect, will be unavoidable early on,” said Tauhid, pointing to years of state-funded research and development, upfront costs of plant construction and talent development before any commercial rollout.
As a state-owned firm, Pindad would “naturally receive full backing,” Tauhid added, citing regulatory protection, budget allocations and preferential loans as potential state support.
But he cautioned that long-term support had to be locked in, because “this is not a short-term project.”
Automotive expert Yannes Pasaribu from the Bandung Institute of Technology (ITB) said Indonesia still lacked core EV competencies, including domestic research and development, battery-cell production and control over critical technologies like engines and software.
Scaling an EV would require far deeper engineering, technology transfer and a coordinated industrial strategy, a leap from Pindad’s current experience with the Maung SUV, he said.
“The main challenges for a 2027 locally made EV, as opposed to rebadging, are a dependence on imported parts and an immature battery ecosystem,” Yannes told the Post on Saturday, referring to earlier national cars attempts.
The government’s price target could become “more attainable over time” as global battery costs fall, Yannes said, with industry forecasts placing prices near US$67 per kWh by 2030–2032.
That could align EV production costs with internal-combustion models and allow over 40 percent local content, “but certainly not by 2027,” he added.
However, he noted that the battery choice itself was another issue. While nickel-rich Indonesia had an edge in NMC supply chains, global demand had shifted toward cheaper lithium-iron-phosphate (LFP) batteries, which are expected to remain about 25 percent less expensive than NMC.
A 2027 target would be realistic through collaboration with an established partner, he said, adding it also required “certainty on Pindad’s new BEV plant in Purwakarta and coordinated scaling with IBC’s [Indonesia Battery Cooperation] battery projects in Karawang to hit early economies of scale.”
Both industrial sites are located in West Java and part of the government’s broader nickel downstream development initiative.