Indonesian government halts EV incentives or affects industry growth

social dynamics3hrs agoupdate PrintEnterprise

0 0

The Indonesian Institute for Energy Services Reform (IESR) believes that the government's plan to end EV incentives in 2026 could trigger significant economic losses and slow down the development of the domestic EV ecosystem.The institute estimates that if the momentum of EV conversion is interrupted, it will lose at least 544 trillion dong per year by 2060 in cumulative economic benefits from the battery and EV integration industry.

The incentives include a reduction in the import tariff on complete electric vehicle (CBU) imports from 50% to 0%, a value-added tax (PPN) reductions, etc., the cessation of which will directly result in higher car prices (loss of 10% PPN incentives and ease of importation), dampen sales, and discourageGrowth of supporting industries such as batteries and components, slowing down the popularity of electric vehicles (which are critical to reducing fuel demand and oil imports).

Currently, although there are8 electric vehicle manufacturersProduction in Indonesia, but still difficult to create healthy competition, with 60% in 2027 and 2030 years away80%'s local component share (TKDN) goal is still far from being achievedThe IESR study showed thatIncentives play significant role in driving EV conversion: record national EV sales hit 68,827 in October 2025, mostly incentive-eligible models; and when the electric motorcycle incentive ends in 2025, first-quarter salesYear-over-year plunge of 80%The

The CEO noted that motor vehicle electrification is at the heart of transportation sector emissions reductions ((contributing 45%-50%), combined with the "avoid-shift-improve" strategy, could result in carbon reductions of 76% in the long term and 18% in 2030.IESR recommended that the government reassess its plan to stop incentives to avoid disrupting the investment climate - some manufacturers are still building factories and need to attract global brands to avoid switching to Southeast Asian competitors.

# Social Dynamics