Indonesia's automotive market is showing signs of recovery, with vehicle sales rebounding and electric vehicle (EV) adoption accelerating.

The government is seeking to sustain that momentum through a new round of EV incentives focused on strengthening the domestic manufacturing ecosystem.

Data from the Indonesian Automotive Manufacturers Association (Gaikindo) show wholesale vehicle sales increased 15.9% year-on-year in the first half of 2026. Electrified vehicles accounted for 26.8% of national passenger vehicle sales during the period, up from 18.3% a year earlier.

The Industry Ministry has confirmed that forthcoming government EV incentives will be directed exclusively towards high-value-added products that support Indonesia's national electric car and two-wheeler development programmes.

Speaking to reporters in Jakarta on August 6th, Industry Minister Agus Gumiwang Kartasasmita said the government aims to ensure the incentive policy strengthens the country's domestic industrial ecosystem.

"The focus of EV incentive recipients, whether four-wheeled vehicles or two-wheelers, will certainly be on products that create high added value in Indonesia, this means strong structural development, but equally important is the national car or electric two-wheeler programme," Agus said.

The Industry Ministry is currently preparing the technical regulations needed to support the policy framework being developed by the Finance Ministry.

Agus said that while details regarding local content requirements (TKDN) are still being finalised, the ministry is prepared to implement whatever criteria are specified in the forthcoming Minister of Finance Regulation (PMK).

"We will support whatever concept is prepared by the Finance Ministry. As a technical ministry, we will prepare the technical aspects based on what is stipulated in the regulation," he said.

The policy follows earlier remarks by Finance Minister Purbaya Yudhi Sadewa, who said President Prabowo Subianto is expected to announce a major EV stimulus package within the next two to three weeks. The package is expected to cover approximately 500,000 electric cars and two-wheelers.

Proposed fiscal incentives include a 100% exemption from the luxury goods sales tax (PPnBM) and a 40% government-borne value added tax (PPN DTP) incentive for eligible models.

However, Purbaya said the tax incentives will be limited exclusively to battery electric vehicles (BEVs), with hybrid electric vehicles and plug-in hybrid electric vehicles (PHEVs) excluded from the programme.

Battery chemistry standards, including the use of nickel-based and lithium-based batteries, are also being considered as part of the eligibility criteria.

The EV acceleration initiative forms part of the 2027 Macroeconomic Framework and Fiscal Policy Principles (KEM-PPKF), which classifies the national car and electric two-wheeler development programme as a National Priority Work Programme (PKPN) under Indonesia's industrial downstreaming roadmap.