Jakarta. State-Owned Enterprises Minister Erick Thohir has unveiled several strategies to boost the adoption of electric vehicles (EVs) in Indonesia. One of these initiatives involves urging the state utility company Perusahaan Listrik Negara (PLN) to offer discounted electricity rates during nighttime hours.

"Around 80 percent of electric vehicle battery charging occurs at home during the night," Erick said on Sunday.

According to Erick, the next step to increase EV adoption is to promote the recycling of electric vehicle batteries.

"This is equally important because nickel will eventually be depleted," emphasized Erick.

Erick highlighted that the development of the electric vehicle industry requires the support of various stakeholders, particularly state-owned enterprises.

According to Erick, government intervention in the automotive industry is a common practice when aiming to expedite its growth. In the 1980s, the government implemented pro-industrialization programs for motorcycles and cars.

Erick explained that subsidizing imported electric cars and motorcycles could potentially accelerate the growth of the electric vehicle battery industry in Indonesia. This possibility arises from Indonesia's dominance in nickel, the primary raw material for electric vehicle batteries.

In March 2023, the government announced a Rp 7 trillion ($447.8 million) allocation to subsidize the purchase and conversion of electric motorbikes over the next two years.

Each unit of brand new electric two-wheelers and a converted e-motorbike that originally ran on combustion engines will receive a subsidy of Rp 7 million. These subsidies will be effective for 2023-2024 and will only apply to 1 million electric motorbikes.

For electric cars, the government has decided to eliminate taxes and import duties for completely built-up (CBU) electric cars until the end of 2025 as long as the company is building a manufacturing plant in Indonesia. 

Vietnam's VinFast and China's BYD are individually investing over $1 billion each to establish factories in Indonesia.

In 2023, the government reduced the value-added tax on electric car purchases to just 1 percent, provided the EV has 40 percent of locally-made components. The program concludes in December 2023.