Indonesia is taking bold steps to establish itself as a hub for electric vehicle (EV) production in Southeast Asia by offering attractive tax incentives to global car manufacturers. Starting in 2025, leading automakers—China’s BYD and GAC Aion, along with France’s Citroen—will benefit from exemptions on import taxes and a reduced luxury sales tax rate of 15 percent. Announced by Industry Minister Agus Gumiwang Kartasasmita, these measures aim to lower manufacturing costs and drive up local EV production and sales.
This strategic move highlights Indonesia’s commitment to creating for global investors and aligns with the government’s ambition to transform the country into a regional hub for battery-powered electric vehicles.
Commitments from global EV manufacturers
The Indonesian government’s incentive programs are already bearing fruit by drawing commitments from leading EV manufacturers. BYD, one of the largest global electric vehicle producers, has expressed plans to establish a manufacturing presence in Indonesia. This expansion aligns with BYD’s ambition to increase its market share in Southeast Asia.
Indonesia’s EV market projections
The Indonesian EV market is expected to experience remarkable growth over the next decade. In 2022, the market was valued at approximately US$ 533 million. By 2029, it is projected to reach US$ 2 billion, driven by a compound annual growth rate (CAGR) of 20.96 percent. This rapid expansion is supported by the government’s ambitious targets for EV adoption. By 2025, Indonesia aims to have 2.1 million electric motorcycles and 400,000 electric vehicles on the road, with 20 percent of these being manufactured locally. By 2030, the government’s target will increase to 2.2 million electric cars and 13 million electric motorcycles.