BEV Tax No Longer Free, Hybrid Car Market Poised to Rise
JAKARTA - Policy changes to taxes on battery electric vehicles (BEVs) and increases in the price of non-subsidised fuel oil (BBM) are expected to shift consumer preferences in the national automotive market, particularly towards hybrid cars.
Amid pressures on purchasing power and uncertainty over incentives, hybrid electric vehicles (HEVs) are seen as the most rational option for consumers seeking efficiency without fully switching to BEVs.
Yannes Martinus Pasaribu, an automotive expert from the Bandung Institute of Technology (ITB), stated that the passenger vehicle segment is currently experiencing a slowdown, especially in the entry-level class.
According to him, the policy change on electric vehicle taxes through Ministry of Home Affairs Regulation No. 11 of 2026 is a key factor influencing market direction.
Under this regulation, battery-based electric vehicles (BEVs) no longer automatically receive exemptions from Motor Vehicle Tax (PKB) and Motor Vehicle Ownership Transfer Fee (BBNKB).
This differs from the previous regulation (Ministry of Home Affairs Regulation 7/2025), which explicitly excluded renewable energy-based vehicles, including electric cars, from taxation.
As a result, tax rates and incentives for electric vehicles now depend on the policies of respective regional governments, whether in the form of full exemptions, reductions, or no incentives at all.
This situation could lead to varying prices for electric vehicles across regions, while adding uncertainty for consumers.
“With such variable price increases across provinces for BEVs, those with low local content (TKDN) will see price hikes unless manufacturers quickly accelerate local production with higher TKDN to keep their selling prices competitive in our local market,” said Yannes.
He explained that without accelerated local production, electric vehicles will struggle to compete in the retail segment, especially as consumers become more price-sensitive.
The combination of petrol engines and electric motors makes fuel consumption more efficient without drastically changing vehicle usage habits, such as the need for charging or charging infrastructure.
In a situation of rising fuel prices, this characteristic becomes an added value for consumers seeking long-term efficiency with lower risks compared to BEVs.
“Essentially, the retail market will increasingly be supported by purchases from the upper middle class and corporations,” he said.
This means that the lower middle segment, which has been the backbone of sales, is likely to face further pressure, while purchases will come more from consumers with stronger purchasing power and business operational needs.