International Business News – Indonesia plans to implement subsidies for electric vehicle purchases to stimulate sales in 2023. Indonesia plans to start subsidizing electric vehicle purchases next year as the country hopes to have 2.5 million electric vehicle users by 2025 to spur demand and reduce air pollution.
Transportation Minister Budi Karya Sumadi said in an interview Thursday that the government is deciding on the size of that and other mechanisms. The new rules will be a “game changer” for the domestic transportation industry.
Indonesia ranks 17th among the world’s most polluted countries, according to the IQAir index, which provides air quality scores for 117 countries.
Joko Widodo, the world’s largest producer of nickel for batteries, seeks to stop exporting raw materials and move up the value chain, an incentive that adds to the list of electric vehicle policies introduced by President Joko in the past year.
Sumadi said regulators are also considering subsidies for the conversion of internal combustion locomotives. He said the government is carefully examining the plan because it would lead to a major shift in the labor-intensive auto industry.
Sumadi said the Transportation Ministry will approach existing Indonesian automakers such as Hyundai Motor Co. and China’s BYD Corp. to build an electric vehicle ecosystem for Indonesia’s new capital city of Borneo that will use exclusively renewable energy.
Earlier this year, the government ordered all state government departments to switch to electric vehicles and told state utility PLN to increase charging stations to reach a target of 2 million electric motorcycle users and 500,000 electric car users within four years. Sumadi expects the public transport sector to be fully electrified within five years.
As of Oct. 3, there were about 28,188 electric vehicles in Indonesia, of which 22,942 were motorcycles and 4,904 were cars, according to the Transportation Ministry. The rest are buses, trucks and three-wheelers.
Sumadi said electric motorcycles could lead the way in growth because they have the same price as internal combustion engine vehicles with faster speeds than electric cars.