Indonesia grants car manufacturers an extra 2 years to secure EV incentives

Indonesia has extended the timeline for car companies to qualify for electric vehicle (EV) incentives, aiming to bolster its position in the growing EV industry, as reported by Reuters. This development was revealed during the Gaikindo Indonesia International Auto Show (GIIAS) 2023.

The decision to grant a two-year extension on the qualification for incentives is aimed at encouraging automakers to meet the local content requirement, which has been set at 40 percent of EV content produced in Indonesia by 2026. This adjustment was made to attract more investors to the country's EV market, with a focus on promoting local battery production.

Indonesia is aiming to establish a competitive EV industry, rivalling China's position as the world's top EV producer. The ambitious target set by Indonesia's government is to produce around 600,000 EVs by 2030, a significant increase from the relatively low number of EVs sold in the country during the first half of 2023.

Previous measures to attract EV manufacturers included reducing import duties from 50 percent to zero, which was aimed at attracting not only Chinese EV makers but also potentially companies like Tesla, which the Indonesian government has shown interest in for some time.

"The relaxation on the local content requirement is to attract the investors," said Indonesia's Industry Minister, Agus Gumiwang Kartasasmita, at the GIIAS 2023. “We roll out incentives for all the global carmakers, not for a certain name only.”

Also read: Volkswagen to set up EV battery plant in Indonesia as demand grows