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Indonesia’s push for electric vehicles (EVs) has kicked into high gear. In recent years the government rolled out a host of new policies to accelerate EV adoption – and 2025 is seeing the impact. From generous tax breaks to local-content mandates and streamlined permits, these measures are supercharging Indonesia’s EV boom. The country set ambitious targets of putting 2 million electric cars and 13 million electric motorbikes on its roads by 2030, and policymakers are keen to make EVs more affordable and infrastructure-ready. This article updates key laws and initiatives energising Indonesia’s EV transition, including national incentives and Bali’s role as a regional EV trailblazer.

Tax Incentives Charge Up EV Adoption To drive down prices, Indonesia has introduced sweeping tax incentives for EVs. Under new regulations, import duty on fully built EVs has been cut to 0%, and the luxury sales tax (PPnBM) is being borne by the government for qualifying vehicles. These perks, in effect from early 2024 through 2025, drastically reduce the cost for importers and consumers. In fact, the government, via Presidential Regulation 79/2023, now provides tax relief including import duty exemptions, luxury tax exemptions and even value-added tax breaks for battery electric vehicles. This temporary tax holiday makes EV cars and buses significantly cheaper compared to conventional vehicles.

Specific Ministry of Finance rules underpin these incentives. Finance Ministerial Regulation No. 9/2024 extended the 100% PPnBM tax break on EV imports and deliveries through fiscal year 2024​, and a similar luxury tax exemption is slated to continue in 2025. Additionally, imported EV batteries and components enjoy reduced or zero import tariffs when brought in by approved EV manufacturers. These fiscal measures align with Indonesia’s low-carbon commitment and have already spurred a spike in EV interest – electric car imports reportedly surged over 300% after the incentives took effect.

Even more directly, the government is subsidising electric motorbike purchases to boost mass adoption. Since 2023, eligible buyers of locally made e-motorcycles will get a Rp 7 million (≈AUD 700) discount per bike, funded by the state. Initially limited, this program was expanded by Industry Ministry Regulation (Permenperin) No. 21/2023 so that any Indonesian adult with a valid ID can claim one subsidised e-motorcycle. The only catch – the bike must meet a minimum domestic content threshold (to support local industry). By lowering upfront costs for consumers, these tax breaks and subsidies are kick-starting demand for EVs across the archipelago.

Local Content Rules Fuel Domestic Industry

• The flip side of generous incentives is a push to build EVs locally. Indonesia ties many benefits to Tingkat Komponen Dalam Negeri (TKDN) – local content requirements. New regulations significantly relaxed the timelines for manufacturers to meet TKDN, giving industry breathing room to ramp up production. President Joko Widodo’s Regulation No. 79/2023 amended the 2019 EV program rules, delaying the 40% local content deadline to 2026 (from the original 2023). In other words, EV makers now have until 2026 to ensure at least 40% of their components are locally sourced. The TKDN bar then rises to 60% for 2027–2029 and 80% from 2030 onward. These escalating targets apply to both two-wheelers and cars, aiming to foster a domestic EV supply chain.
• Local content rules are already influencing market players. Automakers that invest in Indonesian production can import a limited number of completely built units (CBU) tax-free as they set up factories – a concession to “warm up” the market. However, to enjoy such perks, companies must commit to local assembly plans or expanding production capacity in Indonesia. This policy carrot-and-stick encourages global EV brands to build plants domestically rather than simply ship in imports.
• For example, Hyundai and Wuling have ramped up local EV assembly, and newer investors are following suit. Manufacturers also must navigate TKDN certification for critical components like batteries, motors and power control units. The government’s message is clear: Indonesia is open for EV business, but to ride the incentive wave, you must build roots locally. Over time, these TKDN requirements should boost local suppliers, create jobs, and lessen reliance on imported parts – building a more resilient EV ecosystem at home.

Streamlined Licensing & Charging Infrastructure

• Building an EV-friendly ecosystem isn’t just about vehicles – infrastructure and ease of doing business are crucial. Indonesia has moved to streamline land use and licensing for EV industry projects, from factories to charging stations. The 2020 Job Creation (Omnibus) Law paved the way for faster permits, and now sector-specific rules are smoothing implementation. Notably, the Minister of Energy and Mineral Resources Regulation No. 1/2023 overhauled the framework for EV charging infrastructure, replacing an older 2020 rule​. This 2023 regulation makes it simpler for businesses to set up public charging stations (Stasiun Pengisian Kendaraan Listrik Umum, or SPKLU) and battery swap facilities. Providers can obtain a special SPKLU license more easily under a “one-stop” process, and requirements were clarified for equipment standards and safety. By cutting red tape, the government hopes private investors will help build out a nationwide charging network.
• Authorities are also actively facilitating permits for EV manufacturing plants and battery production. The Investment Ministry and BKPM (Investment Coordinating Board) have issued guidelines to expedite approvals for EV sector investments. Under these, qualified EV companies enjoy priority in obtaining business licenses, environmental permits, and even land allocation in industrial zones. As a result, several high-profile battery cell and EV assembly projects – often joint ventures with foreign firms – have broken ground in Indonesia’s industrial parks. The Energy Ministry noted in mid-2023 that the government is “actively facilitating licensing for domestic EV manufacturers and charging station operators to support the EV ecosystem”​. This includes setting up conversion workshops (to retrofit petrol bikes to electric) and ensuring power utilities cooperate in providing grid connections for charging stations.

• On the infrastructure front, state-owned PLN (the electricity utility) and private players are rapidly increasing the number of charging stations. By 2024, public EV chargers had multiplied by nearly 300% compared to the previous year. Major highways and cities now feature fast-charging points, and over 100 public chargers are operational in Bali alone as the island embraces electric mobility. The government even prepared 1,000 EV charging points along holiday travel routes in 2025 to reassure EV-driving motorists​. These developments address the critical “range anxiety” factor. As charging access expands and electricity tariffs for EV users are adjusted to be attractive (PLN has offered special discounted rates at off-peak hours), consumers are more confident to go electric.

Government Targets and Bali’s EV Pilot Programs Indonesia’s EV roadmap comes with bold milestones. The government wants EVs to make up 20% of all new cars and motorbikes sold by 2025, en route to the millions on the road by 2030. While 2025’s goal may be a stretch, sales are climbing fast. EV car sales in 2023 jumped 65% year-on-year, coinciding with the new incentive rollout. By April 2024, Indonesia had roughly 36,000 electric cars in use, up from just a few thousand two years prior. On the two-wheeler side, the surge is even more dramatic – electric motorbike sales nearly tripled from 2021 to 2022. Hitting the 2030 targets (13 million e-bikes and 2 million e-cars) will require sustained growth of 50–70% each year. Officials remain optimistic, citing the recent momentum and continuing policy support as signals that the EV market could reach an inflection point.

Equally important, Indonesia eyes becoming an EV production and export hub in Southeast Asia. The Ministry of Industry has projected domestic production of 600,000 electric cars by 2030, many intended for export. Several automakers plan to use Indonesia as a manufacturing base to ship EVs to regional markets. The government has also leveraged the nation’s rich nickel reserves by banning raw ore exports and incentivising battery downstream investments, ensuring battery cell and pack factories are built onshore. By localising the battery supply chain, Indonesia aims to export not just finished EVs but also the batteries that power them. These strategic moves underscore a long-term vision: to ride the global EV wave not only as a consumer but as a major producer.

Bali stands out as a living laboratory for many of these initiatives. The resort island has taken early action to integrate EVs into its transport and tourism systems. Back in 2019, Bali’s provincial government passed Regional Regulation No. 9/2019, which reduced vehicle taxes for EVs and launched an electric bus pilot program. This made Bali one of the first regions in Indonesia to offer concrete local incentives for going electric. Since then, Bali has continued to lead – deploying electric buses for shuttle services, encouraging hotels and rental companies to provide EV options, and installing public chargers at popular destinations. In 2024, Bali introduced a novel Electric Vehicle Information Centre (EVIC) app to educate residents and visitors about EV ownership​. The app, developed in collaboration with industry, provides info on EV models, charging locations, user reviews, and maintenance tips, aiming to dispel common concerns about range and reliability​. As a tourism hub with a strong green image, Bali’s embrace of EVs not only supports national goals but also showcases to international visitors what an EV-friendly future could look like in Indonesia.

Implications for Investors and Industry Players For businesses in the automotive and energy sectors, Indonesia’s EV policies present huge opportunities – with some strings attached. The generous tax incentives can significantly improve an EV product’s market competitiveness, but manufacturers must ensure compliance with local-content rules and investment commitments. Automotive investors and car makers looking to enter Indonesia should plan for localisation: assembling vehicles locally (or partnering with local firms) is key to accessing import duty and tax breaks. Those that invest early in Indonesian production capacity are effectively rewarded with preferential treatment. The shifting TKDN deadlines to 2026 give a bit more time to set up supply chains, but companies still need a clear roadmap to increase Indonesian-made components in their EVs by the end of the decade.

Infrastructure and energy companies also stand to benefit. The push for nationwide charging stations means opportunities for charging network operators, battery swapping services, and even property developers (integrating chargers into buildings and parking areas). Licensing reforms under the OSS (Online Single Submission) system and MEMR regulations make it easier for new entrants to get permits as charging service providers. Additionally, electricity providers can expand business by partnering in EV charging, as seen with PLN’s programs. That said, players in this space must navigate technical standards (Indonesia requires chargers to meet national or international standards) and work with authorities on grid integration. Overall, the policy landscape is increasingly supportive of the entire EV ecosystem – from mining companies building battery plants, to startups doing combustion-to-electric conversions for motorbikes.

Land and real-estate investors may find new prospects too. Industrial zones dedicated to EV and battery production are being promoted by the government, potentially offering incentives like tax holidays, expedited land permits, and infrastructure support for tenants. Meanwhile, logistics and infrastructure firms might get involved in developing EV-ready facilities, such as highway rest areas equipped with fast chargers, or solar-powered charging hubs on government land. In short, Indonesia’s regulatory push is creating an environment where many pieces of the EV puzzle – manufacturing, infrastructure, and supply chain – can grow in tandem.

Staying Ahead: Indonesia’s EV regulatory landscape is evolving quickly, and more adjustments will likely come as technologies mature. Automotive and energy businesses are advised to stay informed on the latest policies – whether it’s a new tax incentive, an updated local content rule, or revised technical standards. Importantly, companies should consider securing professional legal guidance to navigate compliance requirements and maximise the benefits on offer. By understanding the new laws powering the EV boom, stakeholders can confidently charge ahead and be part of Indonesia’s electric mobility revolution.