Indonesia to Introduce New Incentives for Electric Vehicles with High Local Content

Enhanced Incentive Scheme for Automotive Industry

The Indonesian government is planning to introduce a more detailed incentive scheme for the automotive industry in 2026, with a particular focus on the Tingkat Komponen Dalam Negeri (TKDN) or local content requirements. Minister of Industry, Agus Gumiwang Kartasasmita, stated that the proposed incentives will be more comprehensive than previous policies, taking into account various factors including vehicle segments, technology types, and the percentage of local content.

Focus on Electric Vehicles with Nickel-Based Batteries

The new policy is expected to particularly benefit electric vehicles that utilize nickel-based batteries, a significant aspect given Indonesia's rich nickel reserves. By promoting the use of locally sourced materials in battery production, the government aims to boost the local automotive industry, especially in the electric vehicle segment. This move is part of a broader strategy to enhance the country's position in the global electric vehicle market.

Implications for the Local Automotive Industry

The proposed incentives are likely to have a positive impact on the local automotive industry by encouraging the production of electric vehicles with high local content. This could lead to increased investment in the sector, job creation, and a boost in the overall economy. The government's focus on TKDN is also expected to promote the development of a more robust domestic supply chain for electric vehicle components.