Indonesia plans to subsidize around $5,000 per electric car

Indonesia is finalizing subsidies for the purchase of electric vehicles to promote the popularity of local electric vehicles and attract more investment.

On December 14, Indonesian Industry Minister Agus Gumiwang said in a statement that the government plans to provide subsidies of up to 80 million Indonesian rupiah (about 5,130 U.S. dollars) for each domestically produced electric vehicle, and for each hybrid electric vehicle. A subsidy of about IDR 40 million is provided, with a subsidy of about IDR 8 million for each electric motorcycle and about IDR 5 million for each motorcycle converted to be powered by electric power.

The Indonesian government’s subsidies aim to triple local EV sales by 2030, while bringing in local investment from EV makers to help President Joko Widodo build an indigenous end-to-end EV supply chain vision. As Indonesia continues its push to produce components domestically, it is unclear what proportion of the vehicles would need to use locally-produced components or materials to qualify for the subsidy.

Indonesia plans to subsidize around $5,000 per electric car

Image Credit: Hyundai

In March, Hyundai opened an electric vehicle factory on the outskirts of the Indonesian capital Jakarta, but it will not start using locally produced batteries until 2024. Toyota Motor will start producing hybrid vehicles in Indonesia this year, while Mitsubishi Motors will produce hybrid and electric vehicles in the coming years.

With a population of 275 million, switching from internal combustion engine vehicles to electric vehicles could ease the burden of fuel subsidies on the state budget. This year alone, the government has had to spend nearly $44 billion to keep local gasoline prices low, and every reduction in subsidies has sparked widespread protests.


Post time: Dec-16-2022