Indonesia's electric vehicle (EV) market is predicted to grow exponentially, reaching US$ 20 billion by 2030, according to research by the Electric Mobility Ecosystem Association (AEML) and AC Ventures. This massive potential has attracted AIZEN, a South Korean artificial intelligence (AI)-powered financial services startup, to tap into the Indonesian EV credit market.
To achieve this, AIZEN has introduced AI-based financial services to supply credit to the burgeoning Indonesian EV sector. This service will assist financing institutions, e-commerce platforms, and lending banks by leveraging available data. Damien Ngai, Country Director of AIZEN Indonesia, stated that at its core, Aizen is an AI company providing AI solutions for financial institutions. In Indonesia, AIZEN introduces CreditConnect to help resolve EV credit distribution challenges accurately and swiftly.
"AIZEN is committed to expanding Indonesia’s EV ecosystem and advancing financial innovation models. By supplying essential financial services to a broad customer base looking to transition to electric cars and motorcycles, AIZEN aims to facilitate smooth access to the necessary funds," Damien said in a statement on Monday (10/30/2023).
"By introducing AI-based financial services that accelerate credit decision-making in the Indonesian EV market, AIZEN aims to contribute to Greener Finance," he continued.
The Indonesian EV Market
Damien noted that Southeast Asia is AIZEN's primary market focus, with Indonesia targeted to deliver the largest contribution. This is driven by research showing that the development of the electric vehicle ecosystem could boost Indonesia's economic growth to 5.8 percent by 2028. According to him, backed by government support such as subsidies and policies, major corporations committed to ESG mandates, and rising EV literacy, the company believes 2024 will be a massive year for the Indonesian EV market.
Consequently, in Indonesia, AIZEN is focusing on two-wheeled electric vehicle or electric motorcycle financing. AIZEN assesses that the adoption of electric motorcycles will be the first wave of mass EV adoption in the country. "By partnering with e-mobility and logistics companies, we hope to provide affordable financing for riders to own electric vehicles and increase EV adoption rates," Damien said. He added that the company is currently collaborating with two Korean banking partners with a local presence in Indonesia: Sunindo Kookmin Best Finance and Woori Finance. The number of banks could grow as AIZEN adds more local partners. AIZEN also holds partnership agreements with Grab and Lazada.
Damien provided an overview of how similar the two-wheeled vehicle markets are in Vietnam and Indonesia, noting that access to EV financing remains low in both countries.
"Much like in Indonesia, new two-wheeled EV brands in Vietnam, though still small compared to the overall market size, are beginning to take market share from traditional strongholds like Japanese brands," he said. Consequently, financial institutions must now manage these new vehicle types with distinct components like batteries, alongside rising local EV manufacturers that require different assessment methodologies and portfolio management. "This is where AIZEN comes in to provide solutions for financing institutions," he added.
Barriers to Electric Motorcycle Financing in Indonesia
AIZEN’s data indicates that the entry barrier for the electric car market is much lower compared to traditional ICE (internal combustion engine) vehicles. As a result, AIZEN sees many new vehicle brands like BYD, VinFast, and even local brands like Smoot and Alva entering the market. The reliability of these vehicles has yet to be fully tested, while new models are rapidly being introduced. "A major portion of an EV's value is tied to the battery; easily around 50 percent of the overall vehicle cost can come from the battery alone," Damien said. Not just in Indonesia, but worldwide, banks are still in the learning phase of understanding electric vehicles. "Therefore, a higher risk premium is charged on top of every loan, which needs to be brought down so all parties can see exponential growth," he continued.
EVs and Sustainability Goals in Indonesia
Damien stated that besides its commitment to greener finance, the company also hopes its efforts in Indonesia can play a part in combating climate change. "What we do is align ourselves with the sustainability goals of the government, corporations, and financial institutions to see how best to help them achieve those EV adoption targets," Damien said. According to him, there is no one-size-fits-all solution, and AIZEN does its best to cater to every market segment. "We hope to support local EV players to scale up by connecting them to funding sources, while ensuring traditional players are not left behind," he concluded.
For context, AIZEN is an AI fintech company from South Korea that helps connect data (such as e-commerce, e-mobility, telemedicine, EV, etc.) to financial institutions. In other markets like South Korea and Vietnam, AIZEN focuses on both the electric car and e-commerce markets. However, in Indonesia, AIZEN focuses exclusively on the EV market.
Source: Kompas
https://money.kompas.com/read/2023/10/30/215553526/fintech-korsel-aizen-perkenalkan-layanan-ai-untuk-dorong-pembiayaan-ev-di?page=all
