Economist confident EV incentives will effectively boost automotive market growth

Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti is confident that the planned electric vehicle (EV) incentives will effectively boost automotive market growth whilst accelerating the adoption of environmentally friendly vehicles. Speaking in Jakarta on Tuesday, Esther noted that the effectiveness of the EV incentives, scheduled to be rolled out in July, can be measured against the implementation of previous stimulus schemes, with the primary indicator being an increase in domestic sales and growth of the electric vehicle market. “Incentives such as the Government-borne Value Added Tax (PPN DTP) cut and the Sales Tax on Luxury Goods (PPnBM) have proven highly effective in triggering a surge in demand. The electric vehicle market recorded massive growth of up to 152 percent during the previous stimulus period,” she said. According to data from the Association of Indonesian Automotive Industries (Gaikindo), sales of battery-based electric cars in the first quarter of 2026 reached 33,150 units, an increase of 95.9 percent compared to the same period the previous year. Additionally, the population of electric buses as of April 2026 had reached 798 units, whilst the number of electric motorcycles as of February 2026 was recorded at 236,451 units, accounting for approximately 65 percent of the total national electric vehicle population. She assessed that these achievements demonstrate that appropriate fiscal policies can accelerate the public’s transition towards using electric vehicles whilst strengthening the green technology-based automotive market. Beyond supporting market growth, the adoption of electric vehicles also has a positive impact on efforts to reduce carbon emissions, particularly in urban areas. The use of EVs is considered to contribute to creating better air quality in several operational regions. However, Esther cautioned that the environmental benefits of electric vehicles will be more optimal if supported by cleaner energy sources for charging. “EV adoption has a positive impact on reducing carbon emissions in urban areas, including operational regions like Semarang. However, this effectiveness is still highly dependent on the energy sources supplying the charging infrastructure,” she said. On the other hand, she believes the government also needs to push EV industry players to achieve the Domestic Component Level (TKDN) standard of 40 percent and reduce imports, so that the economic benefits of the growing EV market can be more widely enjoyed by the national manufacturing industry. Going forward, she assessed that strengthening the domestic supply chain and increasing local content will be important factors in ensuring the economic and environmental benefits of the EV industry are felt more broadly. It was previously reported that Finance Minister Purbaya Yudhi Sadewa stated the government is preparing incentives for electric vehicles, targeting 100,000 units each for electric cars and electric motorcycles this year. For electric motorcycles, the government estimates an incentive value of Rp5 million per unit. However, the final amount and scheme of the assistance will be announced further after discussions with relevant ministries and agencies are completed. He also opined that the electric vehicle incentives are being provided to suppress imports of fuel oil (BBM) amidst global oil prices that are expected to remain high in the coming months. Meanwhile, the government has announced a one-month delay in the implementation of incentives for the purchase of electric motorcycles. Coordinating Minister for Economic Affairs Airlangga Hartarto stated the delay is due to the incentive scheme still being under review. “The electric motorcycle incentive was reviewed again yesterday, an additional one month,” Airlangga said in Jakarta on Monday (22/6). The fiscal assistance programme was previously planned to take effect in June 2026. However, Airlangga explained the reason for the delay is that the government currently still needs to thoroughly discuss the implementation mechanism of the programme before its official launch.