Indonesia is pursuing efforts to develop its electric vehicle (EV) industry through local manufacturing initiatives, battery recycling development, policy support and plans for a national car programme.

Government officials have highlighted the need to increase domestic value creation across the EV supply chain while also evaluating new incentives and advancing a circular economy approach to battery production.

Local content and national EV industry development

Coordinating Minister for Maritime Affairs and Investment Agus Harimurti Yudhoyono (AHY) stated that the production of electric vehicles in Indonesia must begin with increasing domestic component levels, with the long-term objective of achieving fully locally manufactured vehicles.

"Domestic component levels need to increase and become dominant. Eventually, vehicles can be truly 100% made in Indonesia," AHY said after attending Grab's Green Step Movement for Indonesia event at Taman Mini Indonesia Indah in Jakarta on June 29th.

According to AHY, Indonesia has the capability to follow neighbouring countries that have developed their own electric vehicle industries. He stated that domestic technological development is unlikely to fall behind because the country possesses qualified engineers.

He further added that development could be supported through joint research and production partnerships with major corporations and other countries. AHY also emphasised the importance of building an ecosystem to support vehicle electrification and industrial growth. This includes implementing government policies and providing incentives to support industry development.

"However, the President frequently emphasises that there must be a strong determination to establish a national automotive industry, beginning with an electric vehicle-based automotive sector," he said.

AHY pointed to China's electric vehicle industry as an example of long-term industrial development. He noted that its progress began with products that required research, development and refinement before reaching their current position.

"This is an inevitability for any growing industry," he further added.

At present, Indonesia does not have any home-grown electric vehicle brands. However, the government plans to develop a national vehicle under the Indigenous Indonesian Car (I2C) brand, which is being developed by Teknologi Militer Indonesia.

Government reviews EV incentives amid national car plans

The government's broader EV strategy is also influencing the review of incentive programmes. Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the government is currently evaluating the proposed EV incentives as it shifts attention towards preparing a national car programme.

"We are still evaluating it, particularly because we are currently preparing a national car programme," Airlangga told reporters at the Smesco Building in Jakarta.

He declined to confirm whether the incentives would be implemented by August 2026, as previously planned, and did not provide details regarding the specific challenges delaying implementation or how the national car programme would be integrated with existing EV development strategies.

The policy review comes amid increasing demand for electrified vehicles in Indonesia. According to data from the Association of Indonesian Automotive Industries (Gaikindo), battery electric vehicle sales are expected to continue growing, supported by a 95.9% increase compared with the corresponding period a year earlier.

Earlier in May 2026, Finance Minister Purbaya Yudhi Sadewa stated that the government was preparing EV incentives during the year, targeting support for future electric car and electric two-wheeler adoption. According to Purbaya, the proposed incentive for electric two-wheelers is estimated at IDR 5 million (US$ 280) per vehicle, while the value of incentives for electric cars remains under consideration.

Building a circular EV battery ecosystem

Alongside vehicle manufacturing initiatives, Indonesia is pursuing the development of a circular economy model for its EV battery industry to address future mineral supply challenges, reduce carbon emissions and promote more sustainable resource utilisation.

Ahmad Faisal Suralaga, Director of Downstreaming Strategy and Governance at the Ministry of Investment and Downstreaming, stated that the government is no longer focusing exclusively on the extraction of raw materials for battery production.

Instead, battery recycling is being promoted as a component of Indonesia's EV battery value chain. According to Suralaga, battery recycling could support Indonesia's participation in the global EV battery supply chain by enabling the development of a battery ecosystem spanning raw material preparation, battery production and end-product manufacturing.

To support these plans, Indonesia is also reforming business policies to reduce investment risks and introducing an integrated system designed to simplify administrative procedures for investors through a single-window clearance mechanism.

Indonesia currently holds significant nickel reserves and has identified the EV industry as a sector for increasing the value of its mineral resources, attracting investment and supporting economic development.

Through local manufacturing, a prospective national car programme, EV incentives, battery recycling and downstream mineral development, the government is seeking to expand domestic participation across the electric vehicle industry's value chain, with continued policy support and long-term development targets in place.