When buying an electric vehicle, is it better to pay in instalments or use investing as a financing strategy? Let's discuss three methods for buying an electric car.

Electric Vehicle

Because they are more fuel efficient (do not use gasoline) and are exempt from odd-even license plate restrictions (in the city of Jakarta), electric vehicles can become the future transportation solution.

Electric cars use electric motors that move using electrical energy. The electrical power is stored in the battery. Here is an electric car chart: Image source: afdc.energy.gov

Electric cars first became popular at the end of the 19th century. This popularity waned because the price of electric car technology at that time was still high while gasoline prices were lower.

In 2022, precisely due to the war between Russia and Ukraine, the price of crude oil became quite volatile. As a result, many countries are experiencing an energy crisis, and fuel prices are increasing.

However, fuel prices in Indonesia are less volatile because the government still provides fuel subsidies. The following is the price trend (2014 - 2019) for Premium grade gasoline. Data source: DataIndonesia.id

After 2018, Premium grade gasoline supplies became more limited and were replaced by Pertalite. The Following is the price trend for Premium and Pertalite from 2014 - 2022. Data source: DataIndonesia.id

In addition to rising fuel prices, many people are starting to make an effort to reduce the effect of greenhouse gases (CO2) which causes global warming.

Global warming causes the earth's temperature to increase. The average temperature on earth is rising by 10 degrees Celcius per year. Image source: scied.ucar.edu

Prices of Electric Cars in Indonesia

Some electric cars have entered the Indonesian market (data as of 16 November 2022).

BMW iX Price: IDR 2,3 Billion Image source: BMW.co.id

Tesla Model Y: IDR 2 Billion Image source: Tesla.com

Tesla Model Y Prices Tesla Model Y Performance: IDR 2,3 Billion Tesla Model Y Long Range AWD: IDR 2 Billion

BMW i4: IDR 2,061 Billion Image source: BMW.co.id

Mercedes EQS: IDR 1,7 Billion Image source: Mercedes-Benz.co.id

Tesla Model 3: IDR 1,5 Billion Image source: Tesla.com

Tesla Model 3 Prices Tesla Model 3: IDR 1,5 Billion Tesla Model 3 Facelift Long Range: IDR 2,85 Billion Tesla Model 3 Performance: IDR 3 Billion

Mitsubishi Outlander PHEV (Hybrid: IDR 1,309 Billion Image source: Mitsubishi-motors.co.id

Lexus UX300e: IDR 1,245 Billion Image source: Lexus.co.id

MINI Electric: IDR 1,050 Billion Image source: Mini.co.id

Hyundai Kona Electric: IDR 859 Million Image source: Hyundai.com

Hyundai IONIQ 5: IDR 748 Billion Image source: Hyundai.com

Hyundai IONIQ5 Prices Harga Hyundai IONIQ 5 Prime – Standard Range: IDR 748 Million Harga Hyundai IONIQ 5 Prime – Long Range: IDR 789 Million Harga Hyundai IONIQ 5 Signature – Standard Range: IDR 809 Million Harga Hyundai IONIQ 5 Signature – Long Range: IDR 859 Million

Nissan Leaf: IDR 730 Million Image source: Nissan.co.id

Toyota Corolla Cross Hybrid: IDR 510,5 Million Image source: Toyota.astra.co.id

Toyota Innova ZENIX HYBRID: IDR 458 Million Image source: Auto2000.co.id

DFSK Gelora Electric: IDR 484 Million Image source: DFSKmotors.co.id

Nissan Kicks e-POWER: IDR 451 Million Image source: Nissan.co.id

Wuling Air EV: IDR 238 Million Image source: Wuling.id

Buying an Electric Car On Credit vs Using Cash

According to Melvin Mumpuni CFP®, buying an electric car through debt financing or cash certainly has pros and cons. This goes back to the purpose of purchasing an electric vehicle: productive vs consumptive activities.

If the decision to buy an electric car is for personal use, the car will not generate income. Advice from Melvin Mumpuni CFP®:

• If CASH is currently not available, invest first.
• If using credit, increase the down payment.

If the decision to buy an electric car is for commercial needs (used for work), the vehicle can generate income. Advice from Melvin Mumpuni CFP®:

• Use credit with instalments that can be covered by business income. The rest of the money can be used for working capital.

Investment Example: Buying an Electric Car

For this example, we will use the Toyota Innova ZENIX HYBRID

• Car price: IDR 458 Million.
• Currently, we only have IDR 200 Million.
• We are looking to buy next year (next 12 months).
• Assumed target return on investment is 10% per year.

Therefore, the monthly investment comes out to IDR 18,865,633. When choosing investment products that generate 10% profit per year, allocate your portfolio to instruments such as stocks, bonds, and mutual funds.

Investment Example: Buying an Electric Car with Instalments

For this example, we will use the DFSK Gelora Electric car

• Car price: IDR 484 Million.
• Currently, we only have IDR 50 Million.
• Looking to buy next year (next 12 months).
• 30% down payment or IDR 145,2 Million.
• Assumed target return on investment is 10% per year.

Therefore, the monthly investment comes out to IDR 7,159,592. When choosing investment products that generate 10% profit per year, allocate your portfolio to instruments such as stocks, bonds, and mutual funds.

The remaining debt comes out to IDR 338,8 Million. Loan interest is 5% per year. The instalment period is five years (60 months).

Therefore, the monthly instalment comes out to IDR 6,393,574. The instalment option can be considered if business profits can still cover vehicle repayments.

You can receive further consultation regarding investing through a Moduit Beyond Financial Advisor. PT Moduit Digital Indonesia is an investment advisory company under OJK (Decree: KEP-30/D.04/2019).

Don't hesitate to contact us using this form or contact a Moduit Beyond financial advisor.