Indonesia EV Profile: Extension Of Local Content Exemption For VAT Reductions Bodes Well For EV Adoption

Total EV sales in Indonesia will rise by 69.1% in 2023, reaching around 17,500 units, driven by tax reduction and new models.

Forecasted Growth in EV Sales

We project that the total sales of electric vehicles (EVs) in Indonesia will experience a significant increase of 69.1% in 2023, reaching approximately 17,500 units. The primary driver for this growth will be battery electric vehicles, as more automakers introduce fully electric models into the market. Additionally, the recent reduction in value added tax (VAT) for EVs, with a new VAT rate of 1%, will further contribute to the rising demand for these vehicles.

EV Penetration Rate Outlook

Despite the anticipated surge in EV sales, Indonesia is expected to achieve a low EV penetration rate of only 1.6% by 2023. To achieve a higher penetration rate, it will be crucial to implement direct EV purchase incentives beyond the current VAT reduction, aimed at reducing costs for consumers. Without such incentives, we estimate that EV penetration will reach a peak of 5.9% by 2032.

Source : Indonesia EV Profile: Extension Of Local Content Exemption For VAT Reductions Bodes Well For EV Adoption