Indonesia has set a subsidy of IDR 3 million (US$ 170) for each electric two-wheeler under its National Electric Motorcycle (MOLINAS) programme, below the IDR 5 million initially considered and the IDR 7 million incentive offered last year.

Finance Minister Purbaya Yudhi Sadewa said the government has allocated IDR 3 trillion for the programme, although the full amount is unlikely to be spent in 2026 because domestic production capacity remains limited and consumer demand is uncertain.

"The target of 1 million units certainly won't be achieved this year. If I'm not mistaken, the subsidy is IDR 3 million per unit with a IDR 3 trillion budget," Purbaya said in Jakarta.

He said domestic electric two-wheeler production capacity remains below the government's initial target of 1 million units and estimated that manufacturers could produce and qualify for the incentive for around 100,000 units, or 10% of the target, by the end of 2026. "National production capacity has not reached 1 million two-wheelers. I think it will be 100,000 units at most by the end of the year," he said.

The government will also consider market absorption and consumer demand when determining how much of the subsidy allocation is used and whether the programme should continue. The IDR 3 trillion budget is therefore not expected to be fully utilised in 2026, with implementation dependent on domestic production capacity and market demand.

The subsidy is intended to support domestic electric two-wheeler manufacturing and encourage consumers to switch from petrol-powered models to electric vehicles. President Prabowo Subianto had previously said the government would provide incentives to companies capable of producing 1 million electric two-wheelers domestically through Indonesian companies.

"We will provide significant incentives for those capable of producing 1 million electric two-wheelers domestically through Indonesian companies," Prabowo said.

Four criteria for National Electric Motorcycles

Indonesia has established four requirements for two-wheelers participating in the MOLINAS programme as part of efforts to develop domestic electric vehicle capabilities and increase local industrial capacity. Atong Soekirman, Assistant Deputy for Industrial Development at the Coordinating Ministry for Economic Affairs, said participating models must have a domestic component level above 60%, covering key components such as the powertrain, frame and structure, plastics and body panels. The government has also outlined a phased approach under which domestic component content (TKDN) is initially set at 40% and is expected to increase to 60%.

The second requirement is that design and engineering must be developed domestically, while the third requires the use of nickel-based batteries to support Indonesia's downstream nickel-processing industry. The fourth requires the two-wheelers to be priced according to the requirements of the domestic market.

According to Atong, MOLINAS is intended to develop Indonesia's capabilities in design, engineering, manufacturing, technology and supply chains, with the government targeting annual production capacity of 100,000 MOLINAS units.

The programme is structured as an integrated ecosystem rather than focusing on a single two-wheeler brand. It was initiated by BPI Danantara in partnership with state-owned electronics manufacturer Len Industri and covers manufacturing, batteries, financing and market absorption.

President Prabowo officially launched the domestically manufactured national electric scooter and its supporting ecosystem at the production facility of Ilectra Motor Group (ALVA) in Cikarang, Bekasi Regency, West Java, on August 13th, 2026.

"On August 13, 2026, with the grace of Almighty God, I, Prabowo Subianto, President of the Republic of Indonesia, officially launch the national electric scooter along with its supporting ecosystem," Prabowo said during the launch ceremony.

Prabowo was accompanied by several Cabinet ministers and business representatives, particularly executives from companies involved in mass-producing electric two-wheelers.

Potential economic and energy benefits

The programme comes as Indonesia has a large conventional two-wheeler fleet but relatively low electric two-wheeler penetration. Electric two-wheeler demand is projected to reach 1.5 million units in 2028.

The wider electrification programme is intended to reduce fuel consumption and government expenditure on energy subsidies. Atong said MOLINAS could save IDR 82.2 trillion in fuel subsidies between 2027 and 2037, assuming 11 million electric two-wheelers are operating by 2037.

"The fuel subsidy savings, assuming 11 million units are operating in 2037, would amount to Rp82.2 trillion," Atong said in Jakarta on August 20th, 2026.

The programme's wider ecosystem is projected to generate up to IDR 150 trillion in economic value between 2026 and 2031 and create around 215,000 jobs across two-wheeler manufacturing, component production, battery manufacturing and charging infrastructure. Atong also said it could strengthen Indonesia's trade balance by reducing oil imports, with import substitution estimated at IDR 45 trillion.

Government calls for stronger electric vehicle ecosystem

Deputy Chairman of Commission VII of the Indonesian House of Representatives, Chusnunia, has called on the government to strengthen the national battery-based electric motor vehicle (KBLBB) industry to support transport-sector decarbonisation and increase domestic economic value.

Chusnunia said electric vehicle development could reduce dependence on fuel while supporting the growth of the EV industry and its supporting infrastructure. Electric vehicles do not produce exhaust emissions during operation, although greenhouse gas emissions are generated during the manufacturing of vehicle components and through electricity production.

"In terms of the environment, electric vehicles do not produce exhaust gas during operation, the greenhouse gas emissions produced only come from the manufacturing process of vehicle components and fuel, namely electricity, so we hope that the production of national electric vehicles will continue to increase both in quantity and quality to stimulate people to switch to electric vehicles, especially Indonesia has a large market," he said, as quoted by Antara.

Chusnunia urged the government to facilitate higher electric vehicle production and the transition towards mass production, with policy support needed to enable national EV products to compete with foreign brands on price and technology. He also said policies that make it easier for consumers to switch to electric vehicles would provide greater certainty for industry players and could send a signal to vehicle manufacturers, consumers and businesses developing supporting EV infrastructure.

According to Chusnunia, sales growth during the first half of 2026 indicates that electrification is accounting for a larger share of Indonesia's automotive market. He said strengthening the EV ecosystem would require a comprehensive approach covering vehicle production, technology, infrastructure and domestic industrial capabilities to ensure that EV growth contributes to the national economy.

The MOLINAS launch at the ALVA production facility in Cikarang is part of the government's wider effort to promote electric mobility while developing Indonesia's domestic industry, technology capabilities, energy resilience and national added value.