The Indonesian government is preparing to introduce a value-added tax (VAT) subsidy for electric vehicles (EVs) to support downstream industrial development.

Finance Minister Purbaya Yudhi Sadewa stated that the level of subsidy under consideration will vary. "Some will be 100%, others 40%; the scheme is still being finalised," Purbaya said at the press conference in May 2026.

Purbaya emphasised that the incentive will exclude hybrid vehicles, and that the allocation will differ between vehicles using nickel-based batteries and those using non-nickel battery technologies.

"The nickel-related aspect will be regulated by the Minister of Industry," Purbaya explained.

The differentiated subsidy structure is intended to support Indonesia's nickel downstream industry. This approach reflects developments in EV-producing countries such as China, where vehicles have been developed that do not rely on nickel as a battery raw material.

"We are now turning to utilise our nickel so that our battery technology down-streaming can progress," he further added.

In addition, Purbaya stated that consultations have been held with Danantara regarding the prospects for EVs using nickel-based batteries.

"Nickel-based ones are in the third generation, while LT (Lithium Titanate) is second generation," he said.

However, no timeline has been specified for the implementation of the EV purchase tax incentive in Indonesia. For reference, Indonesia previously provided VAT incentives for EV purchases, but these expired on December 31st, 2025. As a result, all new EV purchases are currently subject to an 11% VAT.