Indonesian Electric Vehicle Boom: A temporary trend or a long-term vision?

The Indonesian government is implementing a series of incentives to accelerate electric vehicle (EV) adoption and establish a domestic manufacturing hub, leveraging its position as the world's largest nickel reserve holder. While these policies have successfully increased EV sales and attracted foreign brands like BYD, they have created market imbalances and conflicting incentives that may undermine long-term goals of local technology transfer and supply chain development.

• Indonesia has set a target to deploy 12 million electric two-wheelers and 2 million electric cars by 2030 to reduce carbon emissions from the transportation sector, which currently generates over 35 million tons of CO2 annually from approximately 11 million cars.
• The government uses two primary tax incentives: a VAT reduction from 11% to 1% for EVs meeting a 40% local content requirement, and a 0% import duty for manufacturers who commit to establishing domestic factories by 2026.
• Import incentives have led to a rapid increase in market share for foreign brands, specifically BYD, which alone accounted for half of total EV sales. This has negatively impacted established local players; for example, Hyundai's average monthly sales fell from 600 units in late 2023 to 180 units between February and September 2024.
• There is a significant disparity in government subsidies: for every USD 10 in sales, the government foregoes approximately USD 2.6 in tax revenue for BYD compared to USD 1 for Hyundai.
• The current policy framework faces risks including a narrow two-year window for foreign investment decisions, low local content thresholds (40%) that are often met only by final assembly, and conflicting incentives where duty-free imports may delay commitments to local manufacturing.

APA

Suharsono, A., & Bridle, R. (2025). Indonesian Electric Vehicle Boom: A temporary trend or a long-term vision? International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/indonesian-electric-vehicle-boom-temporary-trend-or-long-term-vision

Chicago

Suharsono, Anissa, and Richard Bridle. Indonesian Electric Vehicle Boom: A temporary trend or a long-term vision? International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/deep-dive/indonesian-electric-vehicle-boom-temporary-trend-or-long-term-vision.

Wikipedia

{{cite report |last1=Suharsono |first1=Anissa |last2=Bridle |first2=Richard |title=Indonesian Electric Vehicle Boom: A temporary trend or a long-term vision? |publisher=International Institute for Sustainable Development |date=7 February 2025 |url=https://www.iisd.org/articles/deep-dive/indonesian-electric-vehicle-boom-temporary-trend-or-long-term-vision |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{suharsono2025indonesian, author = {Suharsono, Anissa and Bridle, Richard}, title = {{Indonesian Electric Vehicle Boom: A temporary trend or a long-term vision?}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = feb, url = {https://www.iisd.org/articles/deep-dive/indonesian-electric-vehicle-boom-temporary-trend-or-long-term-vision}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }