In Jakarta’s dense traffic, where the city’s odd-even license plate policy dictates daily driving patterns, a small but growing number of electric vehicles are beginning to stand out. For Nully, an early adopter, the choice to switch was both environmental and economic. “I didn’t want to be someone contributing to transportation emissions,” she said, adding that efficiency and long-term cost savings were also decisive factors. Yet she remains part of a small minority—EVs account for roughly 1% of vehicles on Indonesian roads.
The government of Southeast Asia’s largest automotive market is intent on changing that figure. A series of targeted incentives has been rolled out to make EV ownership more attractive. Luxury sales tax has been removed for electric cars, and value-added tax has been cut from 11% to just 1%. “So it makes the price more attractive,” noted Francisco Podesa, Southeast Asia regional lead for the International Council on Clean Transportation. Electric motorcycle buyers receive a subsidy of 7 million rupiah (about US$700), while state-owned utility PLN offers a 30% discount for home charging between 10 p.m. and 5 a.m. EV drivers also enjoy exemptions from Jakarta’s road usage restrictions, a significant advantage in daily commuting.
These measures are part of a broader industrial ambition. Indonesia aims to position itself as a global hub for EV and battery manufacturing, leveraging its abundant nickel reserves—a critical material for lithium-ion batteries. At a motorcycle and scooter plant outside Jakarta, workers assemble two-wheel EVs under the Selis brand. Marketing manager Imam Subari explained that locally made EVs must include domestic components, with nickel from Indonesian mines forming the core of their batteries.
The country’s first battery production facility is slated to begin operations in 2024, anchoring a supply chain that spans mining to assembly. In November 2023, Indonesia and Australia signed an agreement to “advance mutually beneficial cooperation” in battery manufacturing and critical minerals processing, a move aimed at reducing dependence on Chinese supply chains. China remains the global leader in EV manufacturing and adoption, according to the International Energy Agency.
Indonesia’s production target is ambitious: 600,000 EVs by 2030, a dramatic increase from the modest sales recorded in the first half of 2023. To attract global automakers, the government offers tax holidays and other incentives for foreign investors. Chinese manufacturer Wuling and South Korea’s Hyundai, both producing EVs locally, currently dominate the market, while other automakers have signaled multi-billion-dollar investment plans for Indonesian EV plants.
The regional context is competitive. Thailand, the largest car producer in Southeast Asia, plans to convert 30% of its annual 2.5 million vehicle output to EVs by 2030. Subsidies there can reach 100,000 baht (about US$4,260) per car, though this is lower than earlier packages. The country now accounts for half of all EV sales in Southeast Asia, according to Counterpoint Research.
Vietnam’s EV landscape is led by conglomerate VinFast, which produces cars, motorcycles, and scooters. Uptake has been strongest in the two- and three-wheeler segments, with Podesa noting that “Ten per cent of two-wheeler sales are electric, which is a very, very significant number, given that Vietnam is the third-largest motorcycle market after China and India.” Many of these vehicles use cheaper lead-acid batteries and are produced by newer, smaller firms.
Despite these advances, overall EV adoption in Southeast Asia remains modest. Professor Hussein Dia of Swinburne University of Technology observed that by mid-2023, only about 6% of consumers in the region had switched to EVs. “In comparison, Australia managed to reach an uptake rate of 8.1 per cent in 2023, which is better than in previous years but still lags behind the world average of around 14 per cent,” he said. For lower-income earners, EVs remain “a luxury item” and often “beyond reach” for many Australians.
Charging infrastructure is another constraint. “Most countries in South-East Asia as well as Australia still lack good networks” of charging stations, Dia noted, attributing this to slower progress compared to China’s rapid EV transition. In Jakarta, Nully acknowledges these gaps but remains optimistic. “In the future, I hope it will be easier for us, the pioneer electric vehicle buyers,” she said.