Indonesia to Phase Out Incentives for Imported Electric Cars
Table of Contents
- 1. Indonesia to Phase Out Incentives for Imported Electric Cars
- 2. Shift in Policy: from Import Benefits to Local Manufacturing
- 3. New Production Requirements for 2026-2027
- 4. Impact on the Electric Vehicle Market
- 5. The Global Push for Electric Vehicle Production
- 6. Frequently Asked Questions about Indonesia’s EV Incentives
- 7. What are teh specific financial implications for consumers purchasing a BYD CS after the import subsidies are reduced?
- 8. End of Imported Electric Car Incentives: BYD CS Must Now Be Produced in RI!
- 9. The Shift in Indonesian EV Policy
- 10. Understanding the Incentive Phase-Out
- 11. Why the BYD CS is Directly Affected
- 12. The Riau Islands: A Strategic Location for EV Production
- 13. Implications for Consumers: EV Prices and Availability
- 14. The Broader Impact on Indonesia’s Automotive Industry
- 15. Navigating the New Landscape: Tips for EV Buyers
- 16. Related Search Terms & Keywords
Jakarta – The Indonesian Ministry of Industry has announced it will end incentives for Completely Built Up (CBU) electric vehicles at the close of December 2025.This pivotal decision signals a strategic move by the government to bolster domestic production and foster self-sufficiency in the rapidly expanding electric vehicle market.
Shift in Policy: from Import Benefits to Local Manufacturing
Industry Minister Agus Gumiwang Kartasasmita confirmed that the issuance of CBU permits with associated benefits will cease this year. Currently, these permits allow manufacturers to import electric vehicles without incurring full import duties and luxury goods taxes, making them more competitively priced for consumers. The change reflects a broader initiative to encourage investment in local manufacturing facilities.
The incentives were initially designed to stimulate the early adoption of electric vehicles in Indonesia. Manufacturers benefiting from these incentives, including BYD Auto Indonesia, VIFAST Automobile Indonesia, Geely Motor Indonesia, Xpeng, National Assemblers (Aion, Citroen, Maxus, and VW), and indomobil New Energy indomobil (GWM ORA) have been required to meet investment commitments, often in the form of bank guarantees, to qualify.
New Production Requirements for 2026-2027
Effective January 1,2026,and continuing through December 31,2027,manufacturers will be mandated to adhere to a 1:1 production ratio-for every CBU vehicle imported,they must produce one electric vehicle within Indonesia. This production must also comply with established Indonesian National Standard (TKDN) regulations, ensuring a certain percentage of locally sourced components.
According to Setia Diarta, Director General of the Metal Industry at the Ministry of Industry, the cessation of CBU incentives is linked to manufacturers’ commitments to invest in domestic production. “These brands, like BYD, are investing here, building factories, and producing locally, but the deposit money related to their investment commitments will be discontinued,” he explained.
Did You Know? Indonesia is a key player in the global nickel supply chain,a critical component in electric vehicle batteries.This positions the country strategically to become a major hub for EV manufacturing.
Impact on the Electric Vehicle Market
The move is expected to spur significant investment in local vehicle assembly and component manufacturing. While initial costs for consumers may rise as import incentives are removed, the long-term benefits include a more lasting and resilient domestic electric vehicle industry. A recent report by the International Energy Agency (IEA) highlights that government policies play a crucial role in accelerating EV adoption.
Here’s a summary of the policy timeline:
| Period | CBU Import Incentives | Local Production Requirement |
|---|---|---|
| Now – December 2025 | Available with investment commitments | None |
| January 2026 – December 2027 | Discontinued | 1:1 import-to-production ratio (TKDN compliant) |
Pro Tip: For businesses considering investing in Indonesia’s EV sector, understanding the TKDN requirements is paramount. Meeting these standards can unlock significant opportunities.
The Global Push for Electric Vehicle Production
Governments worldwide are implementing similar strategies to encourage domestic EV production.The United States, such as, offers tax credits for EVs assembled in North America, while the European Union is investing heavily in battery manufacturing capacity. This global trend underscores the importance of securing supply chains and reducing reliance on imports in the EV sector. The increasing demand for sustainable transportation coupled with technological advancements in battery technology are driving this transformation.
Frequently Asked Questions about Indonesia’s EV Incentives
- What is a CBU electric car? A CBU (Completely Built Up) electric car is one that is fully assembled and imported into Indonesia.
- When do the CBU incentives end? The incentives for CBU electric cars will end on December 31, 2025.
- What is the 1:1 production ratio? From 2026,for every electric car imported,manufacturers must produce one car locally in Indonesia.
- What are TKDN regulations? TKDN stands for Indonesian National Standard, and it specifies the percentage of locally sourced components required in electric vehicle production.
- Will electric car prices increase after the incentive ends? Prices may initially rise as import duties are applied, but increased local production could eventually lead to more competitive pricing.
- Which companies are affected by this policy change? Companies like BYD, Geely, Xpeng, and others currently importing CBU electric cars will need to invest in local production.
What impact do you think this policy shift will have on Indonesian consumers? Will it accelerate the adoption of electric vehicles, or create barriers to entry? Share your thoughts in the comments below!
What are teh specific financial implications for consumers purchasing a BYD CS after the import subsidies are reduced?
End of Imported Electric Car Incentives: BYD CS Must Now Be Produced in RI!
The Shift in Indonesian EV Policy
Recent policy changes in Indonesia are dramatically reshaping the landscape for electric vehicle (EV) manufacturers, particularly impacting brands like BYD (Build Your Dreams). The core of the change? The phasing out of government incentives for fully imported electric cars. This means the popular BYD CS model, currently imported, will now need to be manufactured locally in Indonesia – specifically, in the Riau Islands (RI) – to continue benefiting from consumer purchase subsidies. This move is a meaningful push towards establishing Indonesia as a regional EV manufacturing hub.
Understanding the Incentive Phase-Out
For years, Indonesia has offered substantial incentives to encourage EV adoption, including purchase subsidies and tax breaks. These incentives were designed to lower the upfront cost of EVs, making them more accessible to Indonesian consumers. However,the government’s long-term vision extends beyond simply buying EVs; it’s about building them here.
Here’s a breakdown of the key changes:
* Imported EV Subsidies Reduced: Subsidies for fully imported EVs have been significantly reduced, making them less competitive.
* Local Production Prioritized: The government is prioritizing incentives for EVs assembled or manufactured within Indonesia.
* Riau Islands Focus: The Riau Islands have been identified as a key location for EV production due to its strategic proximity to Singapore and Malaysia, facilitating export opportunities.
* Timeline: The changes are being implemented progressively throughout 2025, with stricter requirements taking effect in subsequent years.
Why the BYD CS is Directly Affected
The BYD CS has been a relatively popular choice in the Indonesian EV market, benefiting from the previous incentive structure. however, as a fully imported model, it’s now facing a considerable price disadvantage. To remain competitive and continue accessing the Indonesian market,BYD has been actively exploring options for local production.
Key Considerations for BYD:
* Investment in Local Manufacturing: Establishing a manufacturing facility in RI requires significant capital investment.
* Supply Chain Development: building a robust local supply chain for EV components is crucial for cost-effective production.
* Joint Ventures: BYD may explore partnerships with local Indonesian companies to accelerate the establishment of manufacturing operations.
* Production Capacity: Meeting anticipated demand will require substantial production capacity.
The Riau Islands: A Strategic Location for EV Production
The Indonesian government’s focus on the Riau Islands isn’t accidental. RI offers several advantages for EV assembly and manufacturing:
* Proximity to Key Markets: Close to Singapore and Malaysia, facilitating exports to these rapidly growing EV markets.
* Special Economic Zones: RI boasts Special Economic Zones (SEZs) offering tax incentives and streamlined regulations for investors.
* Infrastructure Development: Ongoing investments in infrastructure, including ports and power grids, are supporting the growth of the EV industry.
* Government Support: Strong government support and commitment to developing RI as an EV hub.
Implications for Consumers: EV Prices and Availability
The shift towards local production will likely have several implications for Indonesian consumers:
* Potential Price Increases (Short-Term): initially,prices of imported EVs may increase due to the reduced subsidies.
* Increased Availability of locally Produced EVs: As local manufacturing ramps up,the availability of more affordable EVs is expected to increase.
* Greater Choice: more manufacturers will likely establish local production facilities, leading to a wider range of EV models.
* Long-term cost Savings: Locally produced EVs may benefit from lower production costs, potentially leading to long-term cost savings for consumers.
The Broader Impact on Indonesia’s Automotive Industry
This policy change isn’t just about EVs; it’s about transforming Indonesia’s entire automotive industry. The government aims to:
* Reduce Import Dependence: Decrease reliance on imported vehicles and components.
* Create Jobs: Generate employment opportunities in the manufacturing sector.
* Boost Economic Growth: Stimulate economic growth through increased investment and production.
* Develop a Skilled Workforce: Invest in training and education to develop a skilled workforce for the EV industry.
* Attract Foreign Investment: Attract foreign investment in EV manufacturing and related industries.
If you’re considering purchasing an electric car in Indonesia, here are some practical tips:
- Research Local Production plans: Find out which manufacturers are committed to local production and when their locally assembled models will be available.
- Compare Prices: Carefully compare the prices of imported and locally produced evs.
- Consider Total Cost of Ownership: Factor in the cost of electricity, maintenance, and potential resale value when making your decision.
- Stay Informed: Keep up-to-date with the latest policy changes and incentives.
- Explore Financing Options: Investigate available financing options and government subsidies for EV purchases.
* Indonesia EV Policy
* BYD Indonesia
*
