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Indonesia Looks to Boost its EV industry With New Incentives

“We are finalising negotiations with two big global car producers. We hope this new policy will make our position much stronger than before,” senior cabinet minister Luhut Pandjaitan said

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Indonesia will provide new incentives to add momentum to its up and coming electric vehicle industry, its government announced on Monday.

The incentives will start from March 20, aiming to attract investment from indsutry giants like Tesla, senior cabinet minister Luhut Pandjaitan said.

The incentive programme will cover sales of 200,000 electric motorcycles and 35,900 electric cars, Industry Minister Agus Gumiwang Kartasasmita said. It will also cover the conversion of 50,000 combustion engine motorcycles, he added.

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The two ministers, who spoke at a news conference, did not disclose the budget set aside for the programme, but said 7 million rupiah (about $458 million) will be disbursed to producers and retailers for each new motorcycle sold and for each converted into an electric bike.

Indonesia is keen to develop domestic EV production facilities to take advantage of its rich nickel reserves, an important material to produce batteries.

“We are finalising negotiations with two big global car producers. We hope this new policy will make our position much stronger than before,” Luhut said without naming the companies.

“If we don’t give (incentives), they will not come to us,” he added.


Tesla Talks

Asked about discussion with Tesla, Luhut said he plans to talk with the US carmaker in coming days.

Tesla announced last week it would build a new “gigafactory” in Mexico, raising questions about whether it would invest in a similar facility in Asia.

Luhut played down doubts and said the Mexico facility would serve the North American market, adding he believed Tesla has a separate commitment in Asia.

“Whether it would be Indonesia, we will see,” he said.

Officials have been trying to attract investment from electric car makers such as Tesla and China’s BYD Auto.

South Korea’s LG and Hyundai have started construction on plants to assemble batteries and electric cars in the Southeast Asian country.

Agus said that companies eligible to join the incentive programme are required to have a plant in Indonesia and meet certain local content requirements.


  • Reuters, with additional editing from Alfie Habershon


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Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.


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