The Indonesian government has delayed the rollout of its electric vehicle (EV) incentive programme until July as it continues to finalise the implementation mechanism for a scheme designed to accelerate EV adoption, support the domestic automotive industry and reduce reliance on imported fuel.

While discussions are ongoing regarding incentives for electric two-wheelers, the programme is also expected to provide support for electric passenger cars, which are viewed as a key component of Indonesia's broader electrification strategy.

Coordinating Minister for Economic Affairs Airlangga Hartarto stated that discussions regarding the most appropriate incentive scheme are unlikely to conclude in June, as initially planned.

"Incentives for electric two-wheelers are still under review. The discussion will take another month," Airlangga said.

He stated that the government considers further discussions necessary to ensure that the programme has an appropriate implementation mechanism before its launch.

On May 5th, Finance Minister Purbaya Yudhi Sadewa had announced plans for an incentive package covering 100,000 electric cars and 100,000 electric two-wheelers during the initial phase of the programme.

"We will provide incentives, initially targeting 100,000 electric cars, and we will disburse more once the quota is met, the same applies to 100,000 electric two-wheelers in the first stage," Purbaya said.

Although the government has yet to announce the final incentive amounts, Purbaya estimated support for electric two-wheelers at IDR 5 million (US$ 280) per unit. Details regarding the incentive structure are expected to be finalised following discussions with relevant institutions.

According to Purbaya, the policy was partly influenced by discussions with the industry minister, who proposed financial measures to improve the attractiveness of electric vehicles amid increasing pressure from Indonesia's energy costs.

On May 12th, Purbaya had stated that accelerating the transition to electric vehicles could help Indonesia reduce fuel imports and mitigate the impact of rising oil prices linked to conflict in the Middle East.

"The war seems to be dragging on. This means our fuel consumption will rise at higher prices. If possible, I want to shift to electric (vehicles) in order to significantly reduce (fuel) imports," he said.

Passenger cars expected to benefit from EV incentives

The EV incentives currently being prepared, and expected to begin in July 2026, are anticipated to support growth in Indonesia's passenger vehicle market while encouraging wider adoption of electric mobility.

Executive Director of the Institute for Development of Economics and Finance (INDEF), Esther Sri Astuti, stated that the effectiveness of the programme can be assessed by comparing it with previous stimulus schemes, with increases in vehicle sales and EV adoption serving as key indicators.

"Incentives such as reductions in the Government-Bearing Value-Added Tax (PPN DTP) and the Sales Tax on Luxury Goods (PPnBM) have proven effective in stimulating demand. The EV market recorded growth of up to 152% during the stimulus period," Esther said in Jakarta on June 23rd, 2026.

The strong growth in battery-electric vehicle sales highlights the potential impact of additional financial support on passenger car adoption, particularly as automakers continue expanding their EV offerings in Indonesia.

According to Esther, these figures demonstrate how financial incentives can accelerate the transition to electric mobility while supporting the development of the country's green technology-based automotive market.

"The adoption of new EVs has a positive impact on reducing carbon emissions in urban areas, including operational regions such as Semarang. However, this effectiveness still depends heavily on the energy sources of the power plants supplying the charging infrastructure," she said.

Two-wheelers remain an important part of the programme

The government's initial incentive programme targets 100,000 electric two-wheelers, matching the planned allocation for electric cars.

Focus on domestic manufacturing

Esther also stated that the government should continue encouraging the EV industry to meet the 40% Domestic Component Level (TKDN) requirement. She noted that strengthening local supply chains and reducing import dependence are important for maximising the economic benefits of EV industry growth for Indonesia's manufacturing sector.

The planned incentive programme is therefore expected not only to stimulate demand for electric passenger cars and two-wheelers but also to support domestic industrial development as Indonesia continues its transition to electric mobility.