Uncertainty Surrounds Indonesia's Electric Vehicle Incentives in 2026

Lack of Clear Regulations Creates Industry Concerns

As Indonesia enters 2026, the fate of electric vehicle (EV) incentives remains uncertain. The Value-Added Tax (VAT) incentive for EVs, which was in place in 2025, has expired, and there is currently no official regulation in place to continue or modify these incentives. This lack of clarity is causing significant concern among industry players and consumers alike.

Industry Reaction to Uncertainty

Tenggono Chuandra Phoa, Secretary General of the Indonesian Electric Vehicle Industry Association (Periklindo), expressed his concerns about the absence of clear regulations. He stated that the lack of official guidance on VAT incentives for EVs creates an unhealthy business environment and leaves both manufacturers and consumers in a state of limbo. "We're already in 2026, but there's still no regulation on EV VAT. What are we supposed to reference - 2025 or 2026? We're confused. This should be clarified by the Ministry of Industry and the Ministry of Finance," Tenggono explained.

Impact on Consumers and Manufacturers

The uncertainty surrounding EV incentives is already having a tangible impact on the market. Some manufacturers, such as BYD, have increased prices for their electric vehicles, including the BYD Atto 1 model. This price adjustment reflects the lack of clarity regarding future incentives and the potential additional costs that consumers may face.

Regulatory Background and Future Prospects

The VAT incentive for EVs was an important factor in driving the adoption of electric vehicles in Indonesia. With the incentive's expiration, the government faces pressure to provide clarity on its future policy. Industry stakeholders are awaiting an official announcement from the government regarding the continuation or modification of the incentive program. Until then, the EV market in Indonesia remains uncertain, with potential implications for both consumers and manufacturers.