Published on March 21st, 2023 | by Sounder Rajen

Indonesia To Provide USD450 Million For EV Subsidies Soon

Will Malaysia be able to enjoy EV subsidies for longer now instead?

With electrification becoming the new normal, it is hard to ignore that electric vehicles (EVs) are becoming increasingly more of a necessity, but aside from very few examples, an EV is rather expensive. Thankfully subsidies are available to reduce the price slightly. Now Indonesia is also prepared to offer these subsidies.

Luhut Pandjaitan, Indonesia’s coordinating minister for Maritime Affairs and Investment, speaks during a press conference in Jakarta announcing government subsidies for purchases of electric vehicles,6 March, 2023.

Luhut Pandjaitan, Indonesia’s coordinating minister for Maritime Affairs and Investment, said Indonesia will now offer subsidies including 200,000 electric motorcycles and 35,900 electric cars to consumers and manufacturers this year as part of its efforts to reduce carbon emissions and boost its domestic battery industry.

Moreover, a cash subsidy of IDR7 million (USD450) will be given to each person who buys a new electric motorcycle made in Indonesia from 20 March 2023, said Luhut . He also mentioned that the subsidy value for EV cars will vary depending on the type and model of the vehicle.

He said the subsidies were aimed at making an EV more affordable and attractive to the public and investors. Luhut also said the development of battery-based EVs would help Indonesia to improve its energy security and air quality, as well as create jobs, new technologies and generate state revenue.

Indonesia, Southeast Asia’s largest economy, aims to cut greenhouse gas emissions by 29 percent by 2030 and has pledged to achieve net-zero emissions by 2070.

The country is also rich in nickel and cobalt, key minerals for battery production, and wants to develop its own battery industry for EVs and export markets.

On top of that, Luhut told reporters, “Currently other countries, our neighbors, are encouraging electric vehicle adoption with various incentives. We use the term government assistance. They use massive state funds to make it attractive to invest in the electric vehicle industry.”

Indonesia has been trying to attract global automakers to invest in EV production in the country, which has abundant reserves of nickel, a key ingredient for lithium-ion EV batteries. The government expects that by 2030, EVs will account for at least 20 percent of total vehicle sales in Indonesia.

Last year, Hyundai and Wuling Motors both launched EVs manufactured at their respective plants near Jakarta. Toyota and Tesla have also expressed interest in exploring EV opportunities in Indonesia. Indonesia, home to about 270 million people, is also one of the world’s largest consumers of fuel oil.

What’s more, Indonesia is also trying to attract foreign investment and develop its own supply chain of nickel-based batteries. The country has signed deals with China’s CATL and Hyundai Motors to build EV battery plants in Indonesia so hopefully we see something major come out of this soon.