Indonesia Announces Nationwide EV Initiative
On August 13, President Prabowo stated that government-backed electric cars will enter mass production by 2028. He simultaneously announced a national electric motorcycle initiative that entails a development of a 60-hectare factory complex in West Java. The aim is to produce up to 50,000 Electric Vehicles (EVs) annually and an expansion to a 539-hectare facility with an eventual capacity of up to 300,000 vehicles per year. The initiative aims to develop an integrated EV ecosystem connecting manufacturing, charging, batteries, and after-sales services.
To achieve the national goal to boost EV sales, the government is considering incentives such as cheap loans for electric motorcycles by state-owned lenders. In addition, Jakarta is considering a trade-in scheme to replace 500,000 used motorcycles with the electric ones. There would also be a 40% tax incentive and up to 100% value-added tax exemption for selected electric car purchases. The relief would only, however, cover battery Electric Vehicles, excluding hybrids and plug-in types.
The administration pushes for greater self-reliance on the production and adoption of EVs. This national strategy creates an opportunity for major companies to contribute to domestic localization, however, Japanese and Chinese firms currently dominate Indonesian EV market. As of 2024, held 89% of Indonesian market share but within seven months of entering the market, Chinese BYD has now claimed to hold 36%. Simultaneously, US tariffs have accelerated diversification efforts, seen in the EU-Indonesia Free Trade Agreement (FTA) signed in 2025, which is expected to expand the EU’s trade and investment activity in Indonesia.
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