Indonesia has postponed the rollout of its electric vehicle (EV) incentive programme by one month to July 2026 while the government finalises fiscal and technical calculations related to the subsidy scheme.

Finance Minister Purbaya Yudhi Sadewa stated that the government is still completing several assessments before officially implementing the incentives, which were initially scheduled to begin in June 2026.

"The EV incentive is still delayed by another month," Purbaya told reporters at the Coordinating Economic Ministry office in Central Jakarta on May 26th. He further added that several calculations were still being finalised, although he did not elaborate on the specific aspects under review.

The Indonesian government has prepared incentives for electric cars and electric motorcycles. For electric motorcycles, the government plans to provide incentives of IDR 5 million (US$ 281) per unit.

"For electric cars, we are still calculating how much support we will provide. If that quota is exhausted, we may continue with additional support. It will be the same for electric motorcycles," Purbaya said during the APBN press conference on May 26th.

APBN (Anggaran Pendapatan dan Belanja Negara or State Revenue and Expenditure Budget), is Indonesia's State Budget and annual financial plan, covering government revenue, expenditure and financing. Approved by the House of Representatives (DPR), it outlines how public funds are collected and allocated for sectors such as infrastructure, education, healthcare and social programmes, while also setting economic and fiscal targets.

In the case of electric cars, the government is still discussing the incentive structure, including a possible government-borne value-added tax (VAT) subsidy scheme. According to the current proposal, VAT subsidies could cover between 40% and 100% of vehicle purchases.

The tax subsidy framework will apply only to battery electric vehicles (BEVs), excluding hybrid vehicles. Incentive levels will also be determined based on battery type, with separate treatment proposed for nickel-based and non-nickel-based battery technologies. The EV incentive programme forms part of Indonesia's broader economic stimulus package aimed at maintaining purchasing power and supporting domestic consumption. The policy is also intended to accelerate national EV adoption and support Indonesia's longer-term strategy to reduce dependence on fossil fuels while advancing the country's energy transition agenda.

Separately, an energy economist at Gadjah Mada University, stated that the planned incentives for nickel-based EVs could strengthen Indonesia's battery industry and support the country's mineral down streaming strategy.

According to the economist, directing incentives towards nickel-based vehicles would better align the development of Indonesia's EV industry with domestic resource availability.

"Providing incentives for nickel-based vehicles is a good move because Indonesia produces nickel, which can support down streaming and strengthen the national EV ecosystem," the economist said in a statement in Jakarta on May 26th.

He added that differentiating incentives between nickel-based and non-nickel-based EVs is more targeted than earlier policies, particularly as incentives for completely built-up (CBU) imported EVs are gradually being reduced.

The economist also noted that the policy has become increasingly relevant as Indonesia's EV market continues to expand rapidly. Despite the growth, the market remains dominated by lithium iron phosphate (LFP)-based EVs, while Indonesia does not yet domestically produce the technology or raw materials associated with LFP batteries.

Processed wholesale data from Gaikindo showed that LFP-based EVs accounted for more than 80% of the market in 2024, while nickel-manganese-cobalt (NMC)-based vehicles represented less than 20%. Sales of NMC-based EVs grew at a faster rate than LFP-based models, although LFP technology continued to dominate the overall market share.

The economist stated that the trend demonstrates that Indonesia still has significant room to optimise the use of domestic resources within the EV industry. He warned that if EV market growth continues to be dominated by LFP technology, much of the sector's added value could shift overseas rather than benefiting domestic industries.

"The most important thing is how Indonesia can use this opportunity to build an end-to-end EV industrial ecosystem," he said.

The economist further stated that the government should ensure the development of domestic production facilities, increase local content requirements, and encourage technology transfer from foreign investors to support the establishment of an independent EV industry in Indonesia.

He also said that state mining holding company MIND ID could play a strategic role in strengthening nickel downstreaming and the domestic battery industry, including through partnerships with foreign investors specialising in NMC battery technology.

Overall, the proposed EV incentives are expected to support the expansion of Indonesia's EV ecosystem, encourage the use of locally sourced nickel in battery production, and contribute to the country's broader industrial and energy transition objectives.