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Indonesian government starts providing subsidies to buyers of new electric two-wheelers

On 20 March 2023, the Indonesian Government started providing a subsidy of Rp 7 million (approximately JPY 60,000) per vehicle for the purchase of new electric two-wheelers (KBL). The maximum number of subsidised units is set at 200,000 in 2023 and 600,000 in 2024, for a total of 800,000 units. (In addition, subsidies of 7 million rupiah will be provided for up to 200,000 gasoline-powered motorcycles to be converted to EVs.)
One of the requirements for the subsidy benefit for the purchase of a new vehicle is that it must have a domestic production ratio (TKDN) of at least 40%. Manufacturers/brands that meet this requirement include Volta and Gesits. The selling price of these leading models is expected to be around Rp 10-15 million, and taking into account the Rp 7 million subsidy benefit, there will be cases where electric two-wheelers can be purchased for less than half the price.

Indonesia, which is working to expand the use of EVs from the perspective of reducing fuel consumption and other factors, has been engaged in an EV policy based on the promotion of vehicle and component production (supply side), but has now begun to make allowances for the demand side in earnest. The total subsidy budget is Rp 7 trillion (approximately JPY 60 billion), a figure that has a significant impact.

The market for electric two-wheelers in Indonesia is thought to have been 17 000 units in 2022, but it is certain to grow significantly by 2023 and is expected to exceed at least 50 000 units. On the other hand, there are many challenges in realising the spread of EVs. In particular, the unification of charger standards and the expansion of swap stations are urgent issues. We are now at a crossroads as to whether the market and industry for electric two-wheelers can develop in the way envisioned by the Indonesian government.