The Indonesian electric vehicle (EV) industry is seeing developments in government incentives, local component production and battery technology as EV adoption increases.

The Indonesian Electric Vehicle Industry Association (Periklindo) has highlighted uncertainty surrounding EV incentive policies, saying the lack of clarity could influence consumer purchasing decisions.

Periklindo Chairman Moeldoko said electric vehicles have lower operating costs than internal combustion engine (ICE) vehicles for households and corporations. He cited the Toyota Alphard as an example, saying it can require IDR 7 million-IDR 8 million (US$ 390-450) per month for fuel, while an electric car is said to cost no more than IDR 800,000 to operate.

Moeldoko also said electrification can reduce emissions and potentially lower government healthcare expenditure over the long term. Greater EV adoption could also reduce fuel consumption and the government's requirement for fuel subsidies.

However, he said these factors need to be accompanied by greater certainty regarding government incentives, as uncertainty over their timing and structure could cause consumers to postpone purchases.

"This has a tremendous impact. Therefore, if the government enjoys this, shouldn't hesitate to provide incentives. Why are incentives constantly being delayed? Sometimes they're given hope, and then the next day they're waiting to see when they'll be given," Moeldoko said at the Indonesian House of Representatives on September 21st, 2026.

He said consumers tend to wait for greater certainty regarding incentives before purchasing EVs, affecting sales activity at dealerships and manufacturers.

"So what's happening? All our dealers and manufacturers are now stuck. Under these conditions, many dealers risk going bankrupt. Because people are waiting for the subsidies to be released, they end up not buying electric motorcycles," he explained.

Previously, the Ministry of Finance (Kemenkeu) announced an allocation of around IDR 3 trillion for a 2026 incentive programme supporting purchases of domestically produced electric motorcycles. The budget is intended to support incentives for up to 1 million vehicles, with the government targeting around IDR 3 million per unit.

The proposed incentive is lower than the IDR 7 million per unit provided for electric motorcycle purchases in 2024. As of September 2026, industry players remain concerned about the programme's implementation, particularly the timing of incentive distribution and the mechanism through which consumers will receive them.

Astra Otoparts develops EV components

Astra Otoparts is developing components for four-wheeled EVs as Indonesia's automotive industry increases EV production. The company is developing products for both ICE and EV applications while responding to local-content requirements.

Astra Otoparts Director Sophie Handili said the company is developing general components for ICE and EV vehicles alongside components specifically designed for EVs.

"The components being developed include general parts (components for internal combustion engine/ICE vehicles and EV vehicles) and specific parts (components for EV vehicles)," Sophie told the media, as quoted on September 22nd, 2026.

General components under development include auxiliary batteries, driveshafts, caliper assemblies and wireless mobile-phone chargers. EV-specific components include hybrid dampers, cooling hoses, inverters, motors and battery cases.

The development programme forms part of Astra Otoparts' strategy to supply components for electric powertrains and meet requirements and specifications set by customers, particularly vehicle manufacturers or Original Equipment Manufacturers (OEMs).

"This development is supported by Astra Otoparts' R&D capabilities, allowing the company to continue developing products and capabilities relevant to the development of electric vehicle technology," Sophie said.

Higher TKDN targets increase local component requirements

Local component suppliers face increasing Domestic Component Level (TKDN) requirements as Indonesia raises its requirements for EVs. The government has set a minimum TKDN of 40 per cent for electric cars until 2026, rising to 60 per cent between 2027 and 2029 and 80 per cent from 2030.

The higher targets require Indonesia's component industry to increase production capabilities and maintain supply-chain readiness. Batteries, electric motors and electrical control systems are among the components needed to meet the increasing TKDN requirements.

Local manufacturers and vendors nevertheless face challenges in preparing the thousands of supporting components required throughout the EV supply chain. Astra Otoparts is developing general and EV-specific components, supported by its R&D activities, as it seeks to supply EV manufacturers in Indonesia.

Polytron continues to use LFP batteries

Battery technology is also being discussed as the government encourages the National Electric Motorcycle (Molinas) programme to use domestically produced nickel-based batteries, including Nickel Manganese Cobalt (NMC) technology.

Polytron continues to use Lithium Iron Phosphate (LFP) batteries for its electric motorcycles. Head of Group Product EV 2W Polytron Ilman Fachrian Fadly said the company had studied different battery technologies before launching its EV products and selected LFP based on its research.

"We'll monitor its development, as we've chosen LFP based on extensive research. Before the initial launch, we studied the various types of batteries available worldwide. One example is LFP and nickel," Ilman said.

According to Ilman, Polytron considers LFP to have more suitable safety characteristics than NMC batteries.

"Until now, we believe that LFP is still safer than NMC or nickel. For that reason, we chose LFP," he said.

However, the company has not ruled out adopting nickel-based batteries in the future. Polytron continues to monitor battery technology developments and could consider NMC if it can be adopted correctly, appropriately and safely.

"We're watching developments. Technology is constantly evolving. If, for example, we can adopt it correctly, appropriately, and safely, we'll definitely consider it," said Ilman.

Government promotes locally produced nickel batteries

The government's use of nickel-based batteries for the Molinas programme is linked to Indonesia's nickel downstreaming agenda and efforts to increase local content. Atong Soekirman, Assistant Deputy for Industrial Development at the Coordinating Ministry for Economic Affairs, said during a discussion in Jakarta last August that most electric vehicles globally currently use LFP batteries. He said Indonesia should use its domestic nickel resources by encouraging nickel-based battery products for the national electric motorcycle programme.

"This nickel programme is actually a national downstream programme. We're trying to push this so that Molinas's shipments can use nickel-based battery products, which are part of this downstream programme, in a sustainable manner," Atong said.

The use of locally sourced nickel batteries is also expected to support the Molinas programme's TKDN target by linking the industrial chain from raw materials and battery production through to electric vehicle manufacturing.