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Indonesia is set to end its two-year program of incentives for electric vehicle purchases next year, signaling a shift in strategy as the domestic EV manufacturing sector gains traction. coordinating Minister for Economic Affairs Airlangga Hartarto announced the move Saturday, citing a meaningful increase in local EV assembly – with nearly all electric vehicles now “completely knocked down” in Indonesia. The policy change, aligned with President Prabowo Subianto‘s vision, aims to redirect funds toward bolstering the nation’s EV supply chain and establishing new manufacturing plants.
TANGERANG, Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, has announced that the government will discontinue incentives for electric vehicles next year.
The decision comes after a two-year program of government incentives aimed at stimulating the growth of the EV sector in Indonesia. According to Hartarto, the incentives have already yielded positive results, with several electric vehicles now being assembled domestically.
“The incentives were provided for two years to encourage the establishment of manufacturing facilities. The results are clear – almost all electric vehicles are now being CKD’d – completely knocked down – in Indonesia,” Hartarto stated at the GJAW 2025 event on Saturday, November 28, 2025.
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Hartarto also noted a growing number of electric vehicles, particularly cars, are now available in Indonesia with price tags below Rp 300 million (approximately $19,000 USD). He believes that vehicles in this price range no longer require government incentives. This shift reflects a maturing market and increasing affordability of EVs for Indonesian consumers.
“Looking at prices this year, there are already many options under Rp 300 million. The government has already provided Rp 7 trillion (approximately $440 million USD) in incentives over the past two years,” Hartarto added.
The move aligns with a request from Indonesian President Prabowo Subianto, who suggested that incentives would be better allocated to supporting the development of domestic manufacturing facilities. This signals a strategic shift towards bolstering the Indonesian EV supply chain.
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“The President now wants to focus on building factories. These funds (the incentives) could be redirected to construct national manufacturing plants,” Hartarto explained.
The removal of incentives next year could lead to price increases for electric vehicles. It may also prompt consumers to accelerate their purchases this year to take advantage of the existing incentives. The potential impact on sales figures will be closely watched by industry stakeholders.
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