Indonesia introduces EV incentives

Indonesia will offer government incentives starting 20 March to boost electric vehicle sales and attract investment from foreign companies. Manufacturers must have their own plants in the country to qualify for the subsidies.

The incentive programme would benefit dealers and manufacturers, covering the sale of 200,000 electric motorcycles, 35,900 electric cars and the conversion of 50,000 motorcycles to electric drives, Reuters reports. The government did not announce the total budget allocated for the programme, but stated that 7 million rupiahs ($457.82) would be paid to manufacturers and retailers for each new electric motorcycle sold and each converted to electric.

To be eligible for the subsidies, companies must have a plant in Indonesia and meet specific local requirements. According to Reuters, Indonesia is looking to recruit domestic electric vehicle manufacturing plants to use its nickel reserves for battery production. BASF and French mining company Eramet, among others, have been eyeing nickel deposits there, as are SK On, CATL and LG.

As for international automakers active in the Southeast Asian nation, rumour has it that Tesla is close to signing a preliminary agreement to build a factory in Indonesia. Following Tesla’s announced new factory in Mexico, Cabinet Secretary Luhut Pandjaitan said he expects Tesla to also invest in Asia. “Whether it will be Indonesia, we will see,” he said, adding that Tesla is not the only company in the mix: “We are finalising negotiations with two big global car producers. We hope this new policy will make our position much stronger than before.” He did not specify which manufacturers in the conversation, however.

Hyundai already opened its first vehicle plant in Indonesia a year ago and produces the Ioniq 5 there. Moreover, the manufacturer is reportedly working with LG Energy Solutions to build a battery cell factory in the country. Toyota also seeks billion-dollar investments in Indonesia to build hybrid and electric cars there.


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