Indonesia starts 'protectionist' EV incentives
The Energy and Mineral Resources Ministry in Indonesia has approved a subsidy scheme to accelerate EV adoption and attract foreign investment. As a result, the Asian country is joining the worldwide EV tax credit race as it kickstarts the incentive by the 20th of March, 2023. It's only valid for fleet managers procuring domestic manufacture.
According to the news agency Reuters, the Indonesian leaders are targeting sales of 35,900 electric cars, 200,000 motorcycles and the conversion of 50,000 motorbikes to electric drivelines with the incentive. However, the total amount of the investment plan remains undisclosed.
The government will install lower tariffs at charging stations for those who provide at least three fast chargers and two ultra-fast chargers. The goal for Indonesia is to reach annual sales of 2.2 million battery-powered cars and 13 million electric motorcycles.
Apparently, the local lawmakers took a close look at the President of the USA Joe Biden’s Inflation Reduction Act (IRA), as only vehicles from manufacturers with a locally rooted subsidiary plant are eligible. The protectionist rulings of the American IRA also reserve the subsidies exclusively for locally made EVs and components.
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As several car makers and battery manufacturers are eyeing Indonesia for its nickel reserves, the subsidies must provide a final push. Tesla is eyeing a second factory in Asia, and also BYD and Toyota are in the running. The local market is very Japanese-oriented. Government officials have acknowledged that talks with two major car companies are in their final phase.
EV production and the deployment of a suited charging infrastructure are top industrial priorities for Indonesia (though with a primarily two-wheeled mobility profile) as the country is the largest economy in Southeast Asia. As for now, Hyundai is the only carmaker manufacturing an EV in the country, the Ioniq 5. In a joint venture with LG it will also build a battery factory there. Indonesia wants to be in the global top three EV battery-producing countries by 2027.
Image Source: PLN