Indonesia Reshapes EV Incentives as Prabowo Pushes National Electric Motorcycle
JAKARTA, July 22 — Indonesia's government is tightening the rules on who gets electric vehicle subsidies, redirecting incentives to a select group of companies rather than offering them broadly, Finance Minister Purbaya Yudhi Sadewa said Tuesday. The move comes as President Prabowo Subianto pushes ahead with plans to launch a homegrown national electric motorcycle within weeks.
Purbaya told reporters he's waiting on the Ministry of Industry and state investment agency Danantara to draw up the list of qualifying firms. Those two institutions will decide which manufacturers get support under the retooled program. The announcement effectively confirms that Indonesia's EV incentive scheme, already delayed once while the government recalculated its budget, won't return in its previous open-access form.
"The government will continue providing incentives for the EV industry, but they'll be redirected to selected companies," Purbaya said.
It's a notable shift. Indonesia had originally planned a broad subsidy program covering 200,000 electric two-wheelers and 35,900 electric cars, with the rollout originally slated for June 2026. That target was pushed to July as officials worked through fiscal calculations. Now, with the selection process handed to Danantara and the Ministry of Industry, the program appears to be narrowing further — focusing public money on a smaller group of recipients rather than spreading it across the whole market.
National Electric Motorcycle Takes Shape
The subsidy redesign runs parallel to a bigger political push. President Prabowo confirmed last week that Indonesia will soon launch a national electric motorcycle, with production handled entirely by domestic firms. Speaking at an event in Malang, East Java on July 17, Prabowo said the bike is expected within weeks.
"We will have motorcycles built by Indonesians, we will have cars built by Indonesians," he said. "The Indonesian Military and National Police are already using jeeps built by Indonesians."
Prabowo recalled his time as defense minister, when he chose a more expensive locally-made jeep over a cheaper import. "We were just starting. If I chose the cheaper one, when would Indonesia have its own jeep?" he said.
That locally built vehicle — the Maung tactical vehicle, manufactured by state-owned defense company PT Pindad — is already in service with the TNI and Polri. A special variant, the MV3 Garuda Limousine, has served as the president's official car since October 2024. Now the government wants to replicate that domestic-supply chain model for two-wheelers.
Industry analysts say a national electric motorcycle could reshape Indonesia's EV market. The country is already Southeast Asia's largest motorcycle market, with annual sales of around 6 million units, but electric models make up just a tiny fraction of that total — roughly 75,000 units in 2025 according to AEMLI, the Indonesian Electric Motorcycle Industry Association. A government-backed push, especially one tied to subsidized pricing for selected manufacturers, could rapidly scale that number.
The math is straightforward. Gasoline scooters in Indonesia sell for between Rp 15 million and Rp 25 million ($925 to $1,540), while comparable electric models still carry a Rp 7-10 million premium even after existing subsidies. If the retooled program brings electric purchase prices below Rp 20 million at the point of sale, the economics start to make sense for daily commuters who spend Rp 300,000-500,000 a month on fuel. Charging an electric scooter costs roughly a fifth of that.
Danantara Takes Center Stage
The decision to route subsidy allocation through Danantara — the state investment agency established under Prabowo — signals a broader shift in how Indonesia manages industrial policy. Danantara was created with an initial $900 billion mandate to consolidate state-owned enterprises and direct strategic investment. Its growing role in EV policy suggests the government wants to coordinate subsidies with long-term manufacturing investment rather than treat them as standalone consumer incentives.
That coordination matters because Indonesia sits on a strategic advantage no other Southeast Asian country has: the world's largest nickel reserves. Nickel is a critical input for lithium-ion batteries, and the government has spent years trying to move from raw-ore exports up the value chain into battery and EV production. The nickel downstreaming policy has already attracted billions in investment from Chinese battery giants CATL and Huayou Cobalt, as well as South Korean players like Hyundai and LG Energy Solution.
But converting resource wealth into a domestic EV industry has proven harder than smelting ore. Imported EVs — especially Chinese models from BYD, Wuling, and Chery — still dominate what little electric-car market exists, while domestic production remains concentrated on the two-wheeler segment where brands like Gesits, Selis, and Volta have been selling budget electric scooters for years.
A selective subsidy scheme could favor those local players, especially if the national electric motorcycle project mandates local content requirements above the 40% threshold already in place. The risk is that by picking winners, the government might sideline the very competition that would otherwise bring prices down faster. Tempo magazine reported that industry ministry officials are weighing local-content thresholds as high as 60% for subsidized models, a level that would effectively exclude fully imported vehicles.
Global Context: Tesla Reports, BYD Dominates
The Jakarta policy news lands on the same day Tesla reports its second-quarter 2026 earnings. The company posted 480,126 deliveries in Q2 — its best-ever second quarter and 25% growth year over year — but analysts are focused on margins, not volume. Tesla had to cut prices and offer financing deals to move that many cars, and the question is whether the record delivery number came with healthy margins or a profit squeeze.
Wall Street consensus puts Q2 revenue at roughly $26.4 billion, up from $22.5 billion a year ago. But the earnings-per-share range is wide — from $0.27 to $0.74 — reflecting deep disagreement over how much Tesla spent on discounts. The automotive gross margin excluding regulatory credits is the line that matters: it sat around 12.5% in Q1, and if it held at record volume, the rebound is real. If it fell, Tesla bought those 480,000 deliveries by sacrificing profit.
Tesla deployed 13.5 GWh of energy storage in Q2, up 40% from a year ago, keeping its energy business as the company's most consistent growth driver. But energy alone can't carry a company valued at 177 times forward earnings.
By contrast, BYD delivered 557,090 fully electric vehicles in Q2, comfortably topping Tesla and keeping the global BEV crown. The Chinese giant is also expanding aggressively into Southeast Asia, including Indonesia, where it recently launched the $14,500 BYD e7 sedan and announced plans for a local factory. BYD's edge is vertical integration: it makes its own batteries (Blade batteries), its own power semiconductors, and most of its vehicle components, giving it cost advantages Tesla can't easily match.
That puts Indonesia's selective subsidy strategy in a wider context. Jakarta wants to develop homegrown winners, not become a dumping ground for Chinese exports. But it also needs the investment, technology, and supply chains that only foreign players bring. The tension between those goals — protection versus openness — will define the next phase of Indonesia's EV push, and the Danantara-led selection process will be the mechanism that decides which companies get the government's backing.
What Comes Next
The Ministry of Industry and Danantara haven't published a timeline for the selection process. Purbaya didn't say when the list of approved firms would be ready. But with the national electric motorcycle expected within weeks, pressure is building to finalize the subsidy framework soon.
If the new system works as planned, Indonesia could see a rapid uptick in electric two-wheeler sales, especially if subsidized pricing brings the purchase price close to gasoline scooters that dominate the market today. A 2024-2025 AEMLI survey found that 68% of potential buyers cited upfront cost as the main barrier to switching to electric — higher even than range anxiety or charging availability.
On the car side, the picture is more complex. Indonesia's four-wheeler EV market is still tiny — roughly 35,000 units in 2025 against total annual car sales of over 1 million. Subsidies that pick winners among electric-car manufacturers could accelerate that number, but they could also slow it if the selection process excludes the very companies — like BYD and Hyundai — that have the scale to bring EV prices down for Indonesian consumers.
There's also the charging infrastructure question. Indonesia has roughly 4,000 public charging stations as of mid-2026, concentrated almost entirely in Jakarta, Surabaya, and Bali. Outside those three zones, public charging is virtually nonexistent. A two-wheeler-focused EV push partly sidesteps this problem — most scooters charge overnight from a home wall outlet — but it doesn't solve it for cars, and the gap between charging supply and growing EV adoption is widening.
For now, the market waits on Danantara. The investment agency's decisions will ripple through Indonesia's EV supply chain, affect foreign investors watching from Beijing and Seoul, and determine whether Prabowo's national motorcycle vision becomes a mass-market reality or stays a state-owned niche product.
Sources: Xinhua, The Star/Bernama, ANTARA News, Tesla IR, Electrek, Reuters, Indonesian Ministry of Finance press briefing, AEMLI survey data.