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Estimating the Total Cost of Ownership (TCO) of Electrified Vehicle in Indonesia

Author

Listed:
  • Riyanto

    (Department of Economics, Faculty of Economics and Business, Universitas Indonesia)

  • Chaikal Nuryakin

    (Department of Economics, Faculty of Economics and Business, Universitas Indonesia)

  • Setya Agung Riyadi

    (Institute for Economic and Social Research Faculty of Economics and Business Universitas Indonesia (LPEM FEB UI))

  • Natanael Waraney Gerald Massie

    (Institute for Economic and Social Research Faculty of Economics and Business Universitas Indonesia (LPEM FEB UI))

Abstract

With the Electrified Vehicles (EVs) ventures being in the early stage, the cost-benefit analysis of the vehicles is key towards capturing the Indonesian market. As consumers, however, pricing may not only be the costs they consider; they also consider the total cost of ownership (TCO) of the cars they purchase. With that regard, this study discusses the total cost of ownership (TCO) of the EV in the Indonesian context, including calculations for HEV (Hybrid Electric Vehicle), PHEV (Plug-in Hybrid Electric Vehicle), and BEV (Battery Electric Vehicle), as well as Internal Combustion Engine (ICE) vehicles for comparisons. Specifically, this study aims to: (i) identify the monetary factors which affects total cost of ownership (TCO) of electric and conventional cars in Indonesia, (ii) construct a TCO model and calculate the value of total cost of ownership of electric and conventional cars in Indonesia, and (iii) compare the value of total cost of ownership of electric and conventional cars in Indonesia related to the relevant switching cost between EVs and ICE. Our findings suggest that generally, in Indonesia, higher usage and/or length of ownership of EVs lead to more competitive TCO compared to ICE. We also explore a comprehensive number of scenarios (e.g., total annual mileage, years of ownership, price, fuel prices, and cost incentives) in which the TCO of EV maximizes Indonesian consumer welfare.

Suggested Citation

  • Riyanto & Chaikal Nuryakin & Setya Agung Riyadi & Natanael Waraney Gerald Massie, 2020. "Estimating the Total Cost of Ownership (TCO) of Electrified Vehicle in Indonesia," LPEM FEBUI Working Papers 202043, LPEM, Faculty of Economics and Business, University of Indonesia, revised 2020.
    • Handle: RePEc:lpe:wpaper:202043
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    File URL: https://www.lpem.org/repec/lpe/papers/WP202043.pdf
    File Function: First version, 2020
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    Cited by:

    1. Chandra Setiawan, Indra & Indarto, & Deendarlianto,, 2021. "Quantitative analysis of automobile sector in Indonesian automotive roadmap for achieving national oil and CO2 emission reduction targets by 2030," Energy Policy, Elsevier, vol. 150(C).

    More about this item

    Keywords

    electrified vehicle — incentives — total cost of ownership — Indonesia;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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