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Indonesia to launch EV incentives in June
Indonesia plans to launch electric vehicle incentives in early June 2026 as the government prepares a budget for the program to cut fuel use and reduce oil imports, said Finance Minister Purbaya Yudhi Sadewa.
The plan covers 100,000 electric cars and 100,000 electric motorcycles this year with a 5 million rupiah (US$290) subsidy for each motorcycle.
The government will cover 40% to 100% of value added tax on battery electric vehicles while hybrids are excluded.
The tax break will vary by battery type and models using nickel batteries will get larger support than non-nickel vehicles.
🔗 Source: Kompas
🧠 Food for thought
Implications, context, and why it matters.
Indonesia offers EV incentives after sales fell short
- Indonesia sold 17,000 electric vehicles in 2023, well below the official goal and less than half the target for that year 1.
- The new support covers as many as 200,000 vehicles. It fits a wider 2030 aim of 2.2 million electric cars plus 13 million electric motorcycles on Indonesian roads 2.
- Past subsidies had a 40% local content rule. That standard covered only two models at the time, which narrowed options and held back demand 1.
Indonesia backs nickel while battery demand shifts
- Indonesia wants to favor nickel-based batteries even as lithium iron phosphate (LFP) gains ground. LFP supplied more than 40% of global EV demand by capacity in 2023 3.
- LFP packs often cost less. They are also described as safer and longer lasting, which may fit middle-income markets such as Indonesia. Chinese EV makers including Wuling Motors and BYD use LFP in some vehicles 3.
- That approach could leave policy out of step with battery demand, which may complicate Indonesia’s goal of becoming a competitive EV export hub 1.
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