With global pressure to reduce carbon emissions, electric vehicles have become the primary solution in the energy transition for the transportation sector. Indonesia, with its abundant natural resources and large market potential, is not left behind in this shift. The government’s determination to accelerate the adoption of battery-powered electric vehicles is now yielding tangible results. From incentive policies to local production commitments, Indonesia is striving not only to be a consumer but also a key player on the global stage.

In recent years, Indonesia's efforts to promote the use of electric vehicles have begun to pay off. One of the indicators is the increasing number of electric vehicles on the main roads of Indonesia's major cities. The use of electric vehicles is not only a symbol of technological adaptation but also a real step in the global effort to reduce carbon emissions.

With the Paris Agreement urging countries to reduce carbon emissions, Indonesia is well aware that this major change is inevitable. Fossil fuel-based vehicles must gradually be replaced with more environmentally friendly ones. Accordingly, the government has set ambitious targets through regulations and policies, including Presidential Regulation No. 55 of 2019 on the Acceleration of the Battery Electric Vehicle Program for Road Transportation.

President Joko Widodo has emphasized that the transition to electric vehicles is no longer a choice but a necessity. "The world has changed, and we must follow that change. We do not want to be left behind, especially in terms of environmentally friendly technologies like electric vehicles," the President firmly stated.

Incentives and Government Policy Push

The government’s seriousness in accelerating the adoption of electric vehicles is evident in the various incentives provided, both for consumers and industry owners.

Minister of Industry Agus Gumiwang Kartasasmita has stated that Indonesia is ready to compete with neighboring countries like Thailand in attracting electric vehicle manufacturing investments. "We have prepared competitive incentives to attract investors to build electric car factories in Indonesia," he said.

Tax incentives are also given to electric vehicle consumers, significantly lowering retail prices. This has directly impacted the growing public interest in switching to electric vehicles. According to data from the Association of Indonesian Automotive Industries (Gaikindo), electric car wholesale sales in Indonesia reached 23.045 units from January to August 2024, a significant increase of 177,32 percent compared to the same period the previous year.

"Government policies regarding tax incentives, including the 1 percent value-added tax (PPN), import duty exemptions, and luxury goods tax (PPnBM) exemptions, have played an important role in boosting the appeal of electric cars in the domestic market," said Gaikindo Chairman, Jongkie Sugiarto. With these incentives, electric car prices in Indonesia have become more affordable for consumers.

Currently, at least 18 brands of electric cars are marketed in Indonesia, both locally produced and imported. This trend is expected to continue rising as regulations and incentives become more clearly defined.

Great Potential in the Production Sector

Indonesia not only aspires to be a market but also has great ambitions to become a leading electric vehicle producer in Southeast Asia. This is not a pipe dream, considering Indonesia's abundant natural resources, including its significant nickel reserves, which are a key component in electric vehicle battery production.

The Indonesian government, through the Ministry of Industry, has been pushing for the establishment of electric vehicle battery factories in the country. "We do not want to only be a market but also a major player in the global electric vehicle industry," said Agus Gumiwang. Developing a local battery industry has become a primary focus, particularly in terms of using domestic components (TKDN), ensuring that local components dominate the production of electric vehicles in Indonesia.

This is a strategic move to not only reduce dependence on imports but also enhance Indonesia's competitiveness in the global market. With domestic battery factories, Indonesia can lower production costs and optimize the automotive supply chain.

However, behind this optimism, there are several challenges that must be addressed. One of the biggest challenges is the still-limited charging infrastructure. Although several Public Electric Vehicle Charging Stations (SPKLU) have been built in major cities, their numbers are still far from sufficient to support widespread electric vehicle usage.

The government and the private sector are expected to accelerate the development of this infrastructure. Without an adequate charging network, it will be difficult for the public to switch to electric vehicles. This is one of the priorities that needs to be addressed in the coming years.

Additionally, public awareness of the environmental benefits of electric vehicles still needs to be enhanced. The government has carried out various campaigns and educational efforts, but changing people’s mindsets and habits takes time.

Welcoming a Green Future

With all the resources available, from abundant natural resources, a large market, to government policy support, Indonesia is on the right track to become a key player in the electric vehicle revolution. A greener and more environmentally friendly future is now within reach, and electric vehicles are one of the key factors.

Incentive policies, local production commitments, and the push for electric vehicle use are expected to continue. Not only to meet domestic market demands but also to position Indonesia strategically in the global electric vehicle industry. Optimism remains high, and if all parties collaborate effectively, Indonesia is ready to embrace a brighter electric vehicle era in the future.

Translator: Ratna Puspa Merdika