The government is finalising a new incentive scheme for electric vehicles (EVs) amid changing consumer spending patterns.

Minister of Industry Agus Gumiwang Kartasasmita stated that the lipstick effect phenomenon is one of the factors being considered in the formulation of the policy. The lipstick effect refers to a phenomenon in which consumers continue to purchase small luxury or premium items during difficult economic conditions, such as a recession or a decline in purchasing power.

"Regarding the lipstick effect, I strongly agree that there are several phenomena that we need to pay attention to. If we need to pay attention, it would be very good if we anticipate these phenomena so that the lipstick effect is positive (not the opposite)," said Agus during a working meeting with Commission VII of the Indonesian House of Representatives in Jakarta on June 8th, 2026.

"But we also have to pay attention to items that are considered secondary, or that are not currently needed, or if needed, are not urgent," he continued.

Therefore, the Ministry of Industry, together with relevant ministries, is currently finalising discussions on incentives for two-wheeled and four-wheeled electric vehicles.

"Therefore, we, the government, are currently in the process and have already finalised proposals for incentives for EVs, both four-wheeled and two-wheeled. This is part of our effort to ensure the automotive industry associated with EVs doesn't decline," he said.

Agus said that support for electric vehicles is also linked to the strategy of developing domestic resource-based industries. Given Indonesia's nickel reserves, which are a key raw material for EV batteries, the EV ecosystem is one area being considered under the policy.

"Why EVs? We understand that our strength lies in nickel-based batteries, so the government's focus is on how we can provide support and incentives for EVs, both four-wheeled and two-wheeled," Agus said.

In addition to preparing incentives, the government continues to coordinate with businesses and industry associations to monitor market developments and the challenges facing the sector. According to Agus, industry players have implemented a number of measures, including ensuring raw material availability, controlling logistics costs, and tailoring products to consumer preferences.

"Something that has been done, which in my opinion is appropriate, or the result of communication with them, namely regarding the availability of raw materials, then market preference is linked to the lipstick effect, logistics costs," he said.

Previously, Finance Minister Purbaya Yudhi Sadewa stated that the government had postponed the issuance of EV tax incentives by one month from the initial target of June 2026.

"The EV (electric vehicle) incentives have been postponed for another month," Purbaya said at the Coordinating Ministry for Economic Affairs office on May 26th, 2026.

The postponement is due to the government still calculating budget requirements and various technical aspects before implementing the policy. According to Purbaya, the EV incentives are intended to encourage consumers to switch from fuel-based vehicles to electric vehicles while reducing dependence on imported fuel and crude oil.