Amid growing global pressure to reduce carbon emissions, electric vehicles have emerged as a cornerstone in the transition toward cleaner transportation. Blessed with rich natural resources and a vast market, Indonesia has firmly positioned itself within this shift. The government’s strong push to accelerate the adoption of battery-powered electric vehicles is now yielding tangible results. Through a mix of incentive policies and commitments to local manufacturing, Indonesia aims to go beyond being a consumer and instead strive to become a key player on the global stage.

The country’s efforts to boost electric vehicles usage have begun to pay off in recent years. One clear sign is the rising presence of electric vehicles on the roads of Indonesia's major cities. This shift not only signals a technological leap forward but also represents a meaningful contribution to the global campaign to reduce carbon emissions.

Driven by the Paris Agreement and its call for nations to cut carbon emissions, Indonesia recognizes that the transition from fossil fuel-powered vehicles to cleaner alternatives is no longer optional. In response, the government has rolled out ambitious goals backed by regulations and policies, notably Presidential Regulation No. 55 of 2019 on the Acceleration of the Battery-based Electric Vehicle Program for Road Transportation.

President Joko Widodo has underscored that the transition to electric vehicles is no longer a matter of choice but a pressing 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 commitment to accelerating electric vehicle adoption is evident through a series of incentives directed at both consumers and industry owners.

Minister of Industry Agus Gumiwang Kartasasmita has emphasized Indonesia’s readiness 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.

One of the most impactful moves has been the introduction of tax incentives for EV consumers, which have significantly reduced retail prices and sparked a notable surge in interest. According to the Association of Indonesian Automotive Industries (Gaikindo), wholesale sales of electric cars in Indonesia reached 23,045 units between January and August 2024—marking a staggering 177,32 percent increase 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. These incentives have made electric vehicles more affordable for consumers.

Currently, at least 18 electric vehicle brands—both locally manufactured and imported—are available in the Indonesian market. This trend is expected to continue rising as regulations and incentives become clearer.

Great Potential in the Production Sector

Indonesia is setting its sights not only on becoming a market for electric vehicles but also on emerging as a leading electric vehicle producer in Southeast Asia. This is not a pipe dream, considering Indonesia's abundant natural resources, particularly its vast nickel reserves, a critical component in electric vehicle battery production.

The Indonesian government—through the Ministry of Industry—has been actively promoting the establishment of domestic electric vehicle battery factories. "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 approach is not only strategic in reducing reliance on imported materials but also pivotal in boosting Indonesia's competitiveness in the global market. By producing batteries locally, the country can lower production costs and streamline its automotive supply chain.

Still, amid the optimism, several challenges remain. One of the most pressing is the limited charging infrastructure. While several Public Electric Vehicle Charging Stations (SPKLU) have been set up in major cities, their reach is still insufficient to support mass adoption of electric vehicle usage.

The government and the private sector are expected to ramp up the development of this infrastructure. Without a robust and accessible charging network, it will be challenging to encourage widespread public adoption of electric vehicles—making this a top priority in the coming years.

Another challenge lies in public perception. While the government has launched various campaigns to promote awareness of the environmental benefits of electric vehicles, changing mindsets and habits is a gradual process.

Welcoming a Green Future

With a wealth of resources at its disposal—from abundant natural reserves and a vast market to government policy support—Indonesia is on the right track to becoming a key player in the electric vehicle revolution. A greener and more sustainable future is within reach, and electric vehicles are poised to play a central role in making that vision a reality.

The continuation of incentive-driven policies, commitments to local production, and the steady push for broader electric vehicle adoption are not only aimed at meeting domestic demand but also at positioning Indonesia as a strategic force in the international electric vehicle industry. Optimism is high, and with strong collaboration, Indonesia is ready to embrace a brighter electric vehicle era in the future.

Writer: Firman Hidranto

Editors: Ratna Nuraini/TR/Siti Chodijah

Translator: Ratna Puspa Merdika