Indonesia's electric vehicle market is shifting fast. Chinese automakers now account for the majority of EV sales in the country, and several of them have moved beyond imports to build cars inside Indonesia's borders.
BYD, which entered Indonesia in early 2024, opened a local assembly plant in Subang, West Java, in late 2025. The facility has an annual capacity of 150,000 units and produces the Atto 3 and Dolphin models for domestic sale. Wuling, the longest-established Chinese EV brand in Indonesia, already assembles the Air EV in Cikarang and has expanded its lineup to include the Bingo hatchback.
The nut graf here is simple: Indonesia set a target of 2 million electric vehicles on its roads by 2030, and the only way to hit it is to build them locally. Imports alone won't get there. The government knows this, which is why it tied tax incentives to local assembly in the first place.
According to the Indonesian Automotive Industry Association (Gaikindo), EV sales reached 43,000 units in 2025, up from 17,000 in 2024. That is a 153 percent jump in one year. Chinese brands captured roughly 70 percent of those sales. Japanese manufacturers, who dominate Indonesia's internal-combustion market, hold less than 5 percent of the EV segment.
"The speed of the Chinese entry has caught everyone off guard," said Andrianto, an automotive analyst at a Jakarta-based research firm. "Local suppliers are scrambling to qualify as Tier 1 partners."
The Indonesian government's incentive package is the engine behind this growth. EVs assembled locally with at least 40 percent local content receive a 0 percent luxury tax and a reduced VAT rate. Imported EVs face a 10 percent luxury tax. The policy, introduced in 2023 and extended through 2027, was designed to attract manufacturing investment rather than just flood the market with imports.
It worked. BYD committed $1.3 billion to its Subang plant. Chery announced a $1 billion investment in a factory in Bekasi. Wuling has spent over $700 million across two facilities. Together, these three companies alone account for more than $3 billion in committed EV manufacturing investment in Indonesia.
But the local content requirement is the hard part. Indonesia's battery supply chain is still thin. The country holds the world's largest nickel reserves, and the government has banned raw nickel exports to force domestic processing. Several battery precursor plants are under construction in Morowali and Weda Bay. None are producing at scale yet.
This creates a gap. Automakers can assemble cars now, but they cannot source batteries locally. Most battery packs are imported from China. Until domestic cell production starts, the 40 percent local content threshold is met with body panels, wiring, and interior components rather than the most expensive part of the vehicle.
"We are building the car before we build the battery," said a senior engineer at one of the Chinese assembly plants, who asked not to be named because he was not authorized to speak publicly. "The battery is 30 to 40 percent of the cost. That is the piece we still don't have."
The government is aware of the gap. The Ministry of Industry has set a target of 10 gigawatt-hours of domestic battery production by 2027. Two projects are in progress: a Hyundai-LG Energy Solution plant in Karawang and a CATL-Indika Energy joint venture in North Maluku. Both are scheduled to begin production in 2026, though delays are possible.
Charging Infrastructure Lags Behind Sales
Charging is the other bottleneck. Indonesia had roughly 2,500 public charging stations at the end of 2025. That number needs to grow tenfold to support 2 million EVs, according to the Ministry of Energy and Mineral Resources. PLN, the state electricity company, has committed to installing 10,000 stations by 2027, but progress has been slow outside Java.
The geography works against it. Indonesia is an archipelago of over 17,000 islands. Building charging networks across Sumatra, Kalimantan, and Sulawesi requires grid upgrades that take years. In many areas outside Java, the grid itself cannot handle the load of fast chargers.
"Charging deserts are real," said Rizki Pratama, who runs an EV owners' group in Makassar. "I drive a BYD Dolphin. I can charge at home, but if I need to go to Parepare, I'm planning my route around a single charger at a mall."
Japanese Automakers Face a Dilemma
Toyota and Honda, which together hold over 60 percent of Indonesia's total auto market, have been slow to bring EVs to the country. Toyota sells the bZ4X, but it is priced above 1 billion rupiah, well above the average Indonesian car buyer's budget. Honda has not launched an EV in Indonesia at all.
The hesitation is strategic. Both companies have invested heavily in hybrid technology and are betting that hybrids will remain the dominant transition technology in Southeast Asia. That bet made sense when charging infrastructure was weak and electricity grids were dirty. It looks less certain now that Chinese EVs are selling at prices below 400 million rupiah.
"Toyota is playing a long game," said an executive at a Japanese supplier in Jakarta. "But the long game assumes the market waits for you. The market isn't waiting."
What This Means for Buyers
For Indonesian consumers, the shift is mostly good news. Prices have fallen. The cheapest EVs now start below 300 million rupiah, compared to 500 million two years ago. Maintenance costs are lower than internal-combustion cars. And the government offers free parking and toll discounts for EVs in Jakarta.
The risks are real, though. Resale values are unproven. Insurance costs for EVs run 20 to 30 percent higher than for comparable gasoline cars, according to OJK data. And repair networks for Chinese brands are still thin outside major cities.
The question for 2026 is whether the assembly investments translate into actual sales growth or whether the market saturates at the early-adopter level. Gaikindo projects 80,000 EV sales for 2026, nearly double the 2025 figure. That would put EVs at roughly 8 percent of total auto sales, up from 4 percent.
Whether the charging network, battery supply chain, and grid can keep pace with that growth is the open question. Indonesia has the demand and the policy. The hardware is still catching up.
For more on Indonesia's industrial policy, see Reuters coverage of Southeast Asian manufacturing. Related stories on this site are collected at our EV section.