Update on the Incentive Scheme for Electric Motorcycles and Cars

The government is beginning to reveal initial details of the incentive scheme for purchasing electric vehicles (EVs), both cars and motorcycles, which will soon be launched. Finance Minister Purbaya Yudhi Sadewa stated that the policy is still in the finalisation stage and will be announced further by the relevant ministries. Coordinating Minister for the Economy Airlangga Hartarto echoed this, saying that the electric vehicle incentives will first be reported to President Prabowo Subianto in the near future. Purbaya explained that electric car incentives will be provided through the Value-Added Tax Borne by the Government (PPN DTP) scheme, with varying amounts estimated to range from 40 per cent to 100 per cent. “PPN DTP includes some at 100 per cent and others at 40 per cent. The scheme will still be discussed. This is for EVs, not hybrids,” said Purbaya. The difference in incentive amounts will partly be determined based on the type of battery used. Electric cars with nickel-based batteries are likely to receive larger incentives compared to non-nickel ones. This policy is aimed at encouraging the utilisation of domestic mineral resources while strengthening the national battery industry. “The scheme for nickel-based and non-nickel batteries will differ. The calculation will be carried out by the Minister of Industry. Why is the subsidy for nickel larger? Because it ensures our nickel is utilised,” said Purbaya. In the regulation, the Domestic Component Level (TKDN) calculation is made more structured, with a composition of 75 per cent direct materials, 10 per cent direct labour, and 15 per cent indirect factory costs. Additionally, a tiered component system is applied, where components with TKDN above 80 per cent are fully counted as local content. Meanwhile, components with TKDN below 25 per cent are only partially counted. This policy encourages automotive producers to increase the use of local components to meet the requirements for obtaining incentives. In addition to cars, Purbaya revealed that the government is preparing incentives for electric motorcycles with subsidy values around Rp 5 million per unit. These incentives are expected to increase public interest in two-wheeled electric vehicles while accelerating the transition from fuel oil to cleaner energy.