Indonesia Delays Electric Vehicle Tax Incentives by One Month

Indonesia's government has delayed the rollout of tax incentives for electric vehicles (EVs) by one month, according to Finance Minister Purbaya Yudhi Sadewa. The postponement is necessary to allow for further calculations.

The government had planned to offer incentives for 100,000 electric cars and 100,000 electric motorcycles this year. For motorcycles, the incentive was budgeted at Rp 5 million per unit. For cars, it involved a government-borne Value Added Tax (PPN DTP) of 40-100 percent, specifically for EVs and not hybrids. The incentive amount would depend on the battery type, distinguishing between nickel and non-nickel batteries.

Energy economics observer Fahmi Radhi from Gadjah Mada University views the planned incentives for nickel-based EVs as a significant opportunity to strengthen Indonesia's national battery industry and deepen mineral downstreaming. He stated that this policy is a vital instrument for integrating the national EV industry with domestic resources. "If you look now, the government is more selective. I think incentives for nickel-based vehicles are good because we have nickel production, which can drive downstreaming as part of the national EV ecosystem," Fahmi explained.

Radhi believes that differentiating incentives based on nickel and non-nickel vehicles is more targeted than previous policies, including reduced incentives for imported vehicles. He noted the rapid growth of Indonesia's EV market, with battery electric vehicle (BEV) sales reaching 56,204 units in 2024 and increasing to 114,413 units in 2025, according to Gaikindo. However, he pointed out that the market growth is still dominated by lithium iron phosphate (LFP) battery EVs, whose technology and raw materials are not yet produced domestically.