Electric Vehicle Market Grows as Competition Shifts Beyond Incentives
Jakarta — Indonesia’s electric vehicle market continues to demonstrate growth despite fiscal incentives being rationalised. Competition in the industry is no longer solely dependent on tax relief but is increasingly determined by product innovation, manufacturing cost efficiency, and readiness of the supporting ecosystem.
In recent years, electric vehicles have received various fiscal facilities, ranging from exemption of Luxury Goods Sales Tax (PPnBM), government-borne Value Added Tax incentives (PPN DTP), to relaxation of import duties for completely built-up (CBU) schemes with investment commitments. These policies have facilitated the entry of various global brands into the domestic market, including AION, BYD, VinFast, Citroen, XPENG, and Great Wall Motor.
Hendra Wardana, an analyst and founder of Republik Investor, an investment education institution, believes that amid the rationalisation of fiscal incentives, the price competitiveness of electric vehicles in Indonesia remains relatively stable.
“Producers are becoming increasingly aggressive in introducing models at more affordable prices to reach a wider market,” Wardana stated through a press release on Monday (9 March 2026).
“Factors such as lower energy costs, reduced taxation, simpler maintenance, and potential operational savings make electric vehicles retain quite strong growth prospects in the domestic market,” he added.
From a demand perspective, several indicators also show positive trends. Electric vehicle sales in Indonesia have continued to increase in recent years, driven by greater model variety, development of charging infrastructure, and increasing public interest in more efficient vehicle technology.
Automotive industry sales data also shows electric vehicle penetration beginning to grow faster. Based on data released by PricewaterhouseCoopers Indonesia in November 2025, Indonesia’s electric vehicle market grew 49 per cent.
This growth demonstrates that Indonesia’s electric vehicle market is still in an early growth phase with considerable expansion room.
Yannes Martinus Pasaribu, an automotive expert from ITB, explained that the electric vehicle transformation in Indonesia is now shifting from demand-pull patterns based on fiscal stimulus towards market-pull driven by genuine competition.
“With a market share reaching 12.9 per cent in 2025 or approximately 103,900 units, the resilience of the domestic assembly industry is beginning to be tested through CBU-SKD schemes and readiness of 3S services (Sales, Service, Spareparts),” he said.
He added that the regulation on domestic component level (TKDN) of 40 per cent has also transformed the competitive landscape from subsidy-based price wars towards strengthening the domestic supply chain.