Electric Vehicle Prices to Rise as Import Incentives Expire

Impact of Ending Tax Exemptions

The Indonesian government is set to end the value-added tax (PPN) exemption for imported electric vehicles by the end of 2025. This policy, which has been in place for the past two years, has kept prices competitive with low-cost gasoline vehicles (LCGC). With the incentive ending, electric vehicle prices are expected to rise significantly in 2026.

Current Market Pricing

Currently, electric vehicles in Indonesia are priced between Rp100 million and several billion rupiah. The lower end of this range has been competitive with LCGC gasoline vehicles due to the tax exemptions. Popular models in this price bracket have gained significant market traction, making electric vehicles more accessible to Indonesian consumers.

Future Price Projections

Industry analysts predict that the removal of tax incentives will lead to a substantial price increase. This change could affect market demand and slow the adoption of electric vehicles in Indonesia. The government will need to consider the balance between supporting the EV market and fiscal policy implications.