Break-Even Analysis of Battery Electric Vehicles and Internal Combustion Engine Vehicles in the Indonesian Market

Abstract

The study explores the break-even points (BEP) for total cost of ownership of low passenger (4x2 type) Battery Electric Vehicles (BEVs) and Internal Combustion Engine (ICE) vehicles in the Indonesian market. Utilizing various assumptions, including vehicle type, annual mileage, charging modes, and fuel costs, the analysis incorporates factors such as battery prices, taxes, and government incentives. We employed a TCO model to analyze break-even points (BEPs) over a 7-year ownership duration. The Monte-Carlo simulation confirming BEPs of 5-7 years for high-power BEVs and 4-6 years years for low-power BEVs compared to their ICE counterparts. Over a 7-year TCO, battery costs play a minimal role due to manufacturer warranties, and even with a 15-year outlook, BEVs maintain a competitive TCO position, showcasing the impact of tax policies in favor of BEVs. Results indicate that lower power vehicles have relaxed thresholds, but inflation, BEV battery prices, and fuel subsidies can extend the BEP. Government incentives for BEVs under $40,000 are vital for market competition and achieving BEP, though they present long-term financial challenges. Further research on feebate programs could boost BEV adoption in Indonesia.