This subsidy, which comes in the form of tax deductions, is an effort to encourage an increase in sales and production of electric motorcycles in Indonesia. It is estimated that a total of 130 million conventional motorcycle units are in use on the streets of Indonesia. The government aims for electric motorcycles to control a 10.0 percent slice of the cake in the medium term (either by converting conventional motorcycles into electric ones, or through sales of brand new electric motorcycles).

Widodo has repeatedly stated that he wants to see the development of an electric vehicle industry in Indonesia as this would open employment opportunities for the local population, strengthen Indonesia’s export performance, and would encourage the development of supportive industries (such as an electric battery manufacturing industry).

Also around the globe we see governments offering incentives to encourage people buying electric vehicles. Based on data from the International Energy Agency (IEA), China spent IDR 180 trillion (approx. USD $12.0 billion) in subsidies to encourage people buying electric vehicles, while the European Union introduced a program with a similar amount in 2021. Meanwhile, the United States introduced a program involving IDR 30 trillion (approx. USD $2 billion) to make the electric vehicle a more attractive purchase.


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