Indonesia To Incentivize EV Sales To Attract Investments

Indonesia will provide incentives to increase EV sales beginning March 20, as part of efforts to accelerate adoption and attract investment from companies such as Tesla, said senior cabinet minister Luhut Pandjaitan on Monday.

According to Industry Minister Agus Gumiwang Kartasasmita, the incentive programme will cover sales of 200,000 electric motorcycles and 35,900 electric cars. He also stated that it will cover the conversion of 50,000 combustion engine motorcycles.

The two ministers, who spoke at a press conference, did not reveal the program's budget, but said 7 million rupiah ($457.82) will be distributed to manufacturers and retailers for each new motorcycle sold and converted into an electric bike.

Indonesia is eager to develop domestic EV manufacturing facilities to capitalise on its abundant nickel reserves, which are used to make batteries.

"We are nearing the end of negotiations with two major global automakers. We hope that this new policy will strengthen our position significantly "Luhut stated this without naming the firms.

"If we don't give them (incentives), they won't come," he added.

When asked about talks with Tesla, Luhut said he expects to meet with the American automaker in the coming days.

Tesla announced last week that it would construct a new "gigafactory" in Mexico, raising speculation about whether it would build a similar facility in Asia.

Luhut downplayed concerns, saying the Mexico facility would serve the North American market and that Tesla has a separate commitment in Asia.

"We'll see whether it's Indonesia," he said.

Officials have been attempting to entice investment from electric vehicle manufacturers such as Tesla and China's BYD Auto.

LG and Hyundai of South Korea have begun construction on plants in Southeast Asia to assemble batteries and electric vehicles.

Companies eligible for the incentive programme, according to Agus, must have a plant in Indonesia and meet certain local content requirements.