Indonesia has launched the National Electric Motorcycle (Motor Listrik Nasional or Molinas) programme as part of efforts to increase domestic electric vehicle (EV) manufacturing, expand the local supply chain and increase the adoption of electric two-wheelers.

The programme was officially introduced on August 13th, 2026, at the production facility of Ilectra Motor Group (Alva) in Cikarang, West Java, as Indonesia seeks to increase the share of electric two-wheelers alongside conventional internal combustion engine two-wheelers.

Two-wheelers remain the main form of personal mobility in Indonesia, while electric two-wheelers currently account for approximately 1% of total two-wheeler sales. The government is seeking to establish a domestic EV manufacturing ecosystem. The Molinas roadmap covers component manufacturing, battery technology, charging and battery-swapping networks, commercial financing, distribution and after-sales services, alongside vehicle production.

Building domestic production capacity

Indonesia has an existing manufacturing base for electric two- and three-wheelers. Industry Ministry data shows that the country has 69 battery-based electric vehicle manufacturers producing two- and three-wheeled vehicles, with total capital investment exceeding IDR 1.2 trillion (US$ 74.5 million).

The government is seeking to expand participation by domestic manufacturers, with at least 10 local companies already meeting Domestic Component Level (TKDN) requirements to participate directly in the Molinas programme.

Authorities are also encouraging companies such as the corporate group overseeing Alva to increase production. The government aims to increase Alva's production capacity tenfold as part of a broader target for national electric two-wheeler production.

Higher production volumes could expand the market for component suppliers, reduce manufacturing costs through economies of scale and enable micro, small and medium enterprises (MSMEs) to enter wider automotive supply networks as supporting suppliers.

Expanding the domestic EV value chain

Indonesia's position as the world's largest nickel producer is part of the government's strategy, with policymakers noting that mineral extraction and processing represent the initial stages of the battery value chain.

The Molinas ecosystem is intended to connect domestic nickel refining with battery-cell production, localised component manufacturing, vehicle assembly, downstream distribution and retail. The government aims to retain more stages of the value chain domestically and increase participation by local businesses.

To coordinate the initiative, President Prabowo Subianto's administration has adopted an "Indonesia Incorporated" model. State defence contractor Len Industri has been appointed as the lead integrator, responsible for coordinating state-owned enterprises, private manufacturers, academic institutions, research organisations, financial institutions and MSMEs.

The government considers coordination necessary because EVs have supply chains and market requirements that differ from conventional internal combustion engine vehicles. Manufacturers require supplies of batteries and components, while consumers require financing, battery-swapping infrastructure and maintenance services.

Financing and consumer incentives

The government and financial institutions are seeking to address the cost of electric two-wheelers. Through the government's investment management agency, Danantara, the State-Owned Banks Association (Himbara) is preparing financing packages that could include lower interest rates, longer repayment periods and reduced or waived down payments.

Authorities are also examining structured trade-in programmes that would allow consumers to exchange existing petrol-powered two-wheelers for new electric models. The Indonesian Electric Motorcycle Industry Association (Aismoli) has warned that reducing the purchase incentive from IDR 7 million to IDR 3 million per two-wheeler could weaken demand.

Aismoli public relations and event executive Ririn Rinawati Sinaga said the lower incentive would affect consumers' purchasing power and willingness to switch to electric two-wheelers. She noted that the association had previously worked with academic institutions, including Sebelas Maret University (UNS), to examine how different incentive levels affected the electric two-wheeler market and could revisit the research to assess the impact of the lower subsidy.

Ririn said the industry's main priorities were regulatory certainty and rapid implementation.

"We will simply follow the government's lead. For us, it is about certainty. There is a IDR 3 trillion budget, but when will it happen?" she said.

Finance Minister Purbaya Yudhi Sadewa said the incentive for domestically produced electric two-wheelers had been set at IDR 3 million per unit, with a total budget of IDR 3 trillion. However, he questioned whether the full allocation could be used during 2026 because national production capacity remains below the level required to utilise the entire budget.

Purbaya estimated that electric two-wheeler sales under the incentive programme could reach a certain level by the end of 2026.

"We are still assessing whether market demand this year will be sufficient to absorb all those funds. It doesn't look likely. National electric two-wheeler production capacity hasn't reached 1 million yet; some are at just 20,000 units," he said.

He said production would increase gradually but did not specify a timeframe. The final figures had also not been determined because the regulation governing the incentive was still being formulated, with input from the Industry Ministry and the Office of the Coordinating Economic Minister.

Industry Minister Agus Gumiwang Kartasasmita said an incentive of IDR 5 million per two-wheeler "was a good position" to start with, but declined to specify the number of two-wheelers that would be covered. He said the final allocation would depend on the subsidy budget approved by the Finance Ministry and detailed in a Finance Ministry regulation.

Indonesia has the largest two-wheeler population in Southeast Asia, but the proportion of electric two-wheelers remains lower than in Vietnam.

President Prabowo addressed the issue in his August 14th state budget speech, when he announced a subsidy programme for locally produced electric two-wheelers. He said the initiative would reduce fuel costs for consumers, reduce energy imports and create employment.

"Every locally made electric two-wheeler on the street is a triple win for us," Prabowo said, citing lower fuel costs for consumers, reduced energy imports and additional employment opportunities.

Energy security and economic impact

The government expects electric two-wheeler adoption to reduce Indonesia's dependence on imported refined petroleum products while increasing the use of domestically generated electricity for transport.

Government projections indicate that increasing the national electric two-wheeler fleet to 11 million units by 2037 could generate IDR 82.2 trillion in fuel subsidy savings between 2027 and 2037.

The Molinas programme is also projected to generate IDR 150 trillion in direct economic value between 2026 and 2031 and create approximately 215,000 direct and indirect jobs across manufacturing, infrastructure maintenance and related services. The government's plans also include electric cars and other vehicles. President Prabowo has announced plans for a dedicated electric-car industrial complex in the Purwakarta-Subang corridor of West Java, with mass production targeted to begin by 2028 at the latest. Parallel plans are being developed to electrify public transport fleets and agricultural utility vehicles.

The existing production capacity provides a manufacturing base for the Molinas programme, but adoption at a multi-million-unit scale will depend on further progress in pricing, domestic sourcing, financing, and charging and battery-swapping infrastructure. The Molinas programme is intended to increase Indonesia's domestic manufacturing and supply-chain capacity for electric mobility alongside growth in consumer demand.