Indonesia is considering the introduction of subsidy for electric vehicles (EVs) purchases next year, in a move to ramp up demand for EVs and reduce air pollution, as reported by Bloomberg on October 10. According to Transport Minister Budi Karya Sumadi, the government is deciding on the magnitude of the scheme and a precise subsidy mechanism, as it expects the subsidy scheme to be a game changer for the domestic EV industry. Sumadi revealed that regulators are mulling subsidies for the transformation of internal combustion vehicles to popularize EVs. Electric motorbikes are expected to lead the growth of EV sales in the country, said Sumadi, as their prices are more likely to attract consumers to switch from fossil fuel cars.

The Indonesian government is taking a range of measures to realize its goal of having 2m electric motorcycles and 500,000 electric cars on the road by 2025. As of October 2022, the country only had around 28,188 EVs, including 22,942 motorcycles and 4,904 cars. Earlier this year, the government ordered all state offices to shift to electric vehicles and asked state utility firm PLN to scale up the number of charging stations nationwide. In addition, the country is seeking to introduce global manufacturers to its domestic industry to help establish an EV ecosystem. In April 2022, China’s largest battery producer Contemporary Amperex Technology (CATL) [300750:CH] inked an agreement with two Indonesian state-owned enterprises, namely ANTAM and IBI, to jointly develop a USD5.97bn mining-to-batteries complex in Indonesia.

Sources:

https://www.bloomberg.com/news/articles/2022-10-09/indonesia-may-start-ev-purchase-subsidies-in-2023-to-spur-sales?srnd=premium-asia&leadSource=uverify%20wall

https://www.nst.com.my/world/region/2022/10/837323/indonesia-aims-two-million-electric-motorcycles-road-2025

https://www.prnewswire.com/news-releases/catl-partners-up-with-indonesia-to-boost-e-mobility-with-an-investment-of-nearly-6-billion-usd-301526359.html