Jakarta, Indonesia – Indonesia is rapidly emerging as a key player in the electric vehicle (EV) market in Southeast Asia, thanks to a series of strategic incentives aimed at attracting global manufacturers. Leading the charge are China's BYD and GAC Aion, along with France's Citroen, all of whom are making significant investments in the country.

Starting in 2025, these automakers will benefit from exemptions on import taxes and a reduced luxury sales tax rate of 15 percent, as announced by Industry Minister Agus Gumiwang Kartasasmita. These measures are designed to lower manufacturing costs and boost local EV production and sales, aligning with Indonesia's ambition to become a regional hub for battery-powered electric vehicles.

Commitments from Global EV Manufacturers

The Indonesian government's incentive programs are already yielding results. BYD, one of the largest global electric vehicle producers, has announced plans to establish a manufacturing presence in Indonesia. This expansion is part of BYD's strategy to increase its market share in Southeast Asia.

Similarly, GAC Aion has revealed its intention to build a plant in Indonesia, focusing on EV assembly and battery production. This move supports Indonesia's goal of enhancing local production capabilities. Citroen, a major French automaker, is also exploring investment opportunities, signaling growing confidence in Indonesia's EV market potential.

Indonesia's EV Market Projections

The Indonesian EV market is expected to experience significant 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, aiming to have 2.1 million electric motorcycles and 400,000 electric vehicles on the road by 2025, with 20 percent of these being manufactured locally.

Indonesia's strategic moves and the commitments from global EV manufacturers highlight the country's potential to become a central hub in the regional EV market. With abundant nickel reserves, crucial for EV batteries, and a supportive regulatory environment, Indonesia is well-positioned to lead the charge in Southeast Asia's electric vehicle revolution.