Report warns Indonesia EV market may slow in 2026 as incentives lapse
Thursday, April 16 2026 - 12:58 PM WIB
By Adianto P. Simamora
Indonesia’s electric vehicle market may face slower growth in 2026 after most fiscal incentives expired at the end of 2025 and were not extended into 2026, according to the Regional Energy Transition 2026 Outlook.
The report said tax and import-duty incentives introduced in 2024 helped drive EV sales, but any new incentive framework for 2026 was still under inter-ministerial discussion in early 2026 and would require approval from the Ministry of Finance.
The report said the uncertainty could pull demand forward into the previous incentive period and lead to weaker sales afterward.
“Demand is very dependent on government support,” the report said, noting that battery EV sales in Indonesia jumped by more than 150% in 2024 to about 43,000 units, although that remained small compared with around 865,000 conventional vehicles sold in the same year.
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Even so, major manufacturers are continuing with local production plans. The report cited BYD’s US$1 billion plant in Subang with planned capacity of 150,000 vehicles per year, as well as VinFast’s planned 50,000-unit assembly facility in West Java and its plan for up to 100,000 charging points.
It said the government is promoting these projects as part of its effort to build an EV manufacturing hub linked to Indonesia’s nickel resources and battery investments, including the Hyundai-LG battery cell plant.
The report added that market momentum will now depend more on charging-network expansion, local electricity supply capacity and whether automakers follow through on local manufacturing commitments.
It also warned that charging infrastructure remains insufficient for wider EV adoption and that coordination problems between state utility PT PLN, local governments and private charging operators continue to constrain growth.
Editing by Reiner Simanjuntak