Jakarta. Institute for Development of Economics and Finance (Indef) has warned that any move to halt electric vehicle (EV) incentives could slow Indonesia’s energy transition and add pressure to the state budget, amid lingering global economic uncertainty.

Abra Talattov, head of Indef’s Center of Food, Energy and Sustainable Development, said EV adoption in Indonesia has continued to show steady growth. During the 2026 Christmas and New Year holiday period, the country recorded 234,136 EV charging transactions, with total electricity consumption reaching 5,619 megawatt hours (MWh).

“This achievement reflects a shift in the transportation sector toward cleaner energy sources,” Abra said. However, he stressed that Indonesia’s EV market is currently at a critical phase that requires policy certainty.

“EV growth momentum that has already been formed must be maintained so Indonesia does not return to deeper dependence on fossil fuels,” he said. “Electric vehicles play a strategic role in reducing fossil energy consumption. If this momentum is disrupted, pressure on energy subsidies could actually increase.”

EV sales have also surged. Wholesale electric car sales reached 103,931 units last year, jumping about 141% from the previous year. The figure accounts for nearly 13% of the national automotive market, signaling wider public acceptance of EVs.

Abra said the development of the EV ecosystem is not limited to vehicle sales alone. “It also includes strengthening the national automotive industry, accelerating nickel and battery downstreaming, expanding public charging stations, and ensuring reliable electricity supply,” he said.

On the external front, Abra warned that rising global geopolitical tensions could push up world oil prices, directly affecting domestic fuel prices and increasing the government’s energy subsidy burden.

“In an uncertain global situation, Indonesia needs anticipatory steps to protect the state budget,” he said. “Encouraging electric vehicle adoption is one strategic instrument to achieve that.”

Indef therefore urged the government to consider maintaining fiscal incentives, including the government-borne value-added tax (PPN DTP) scheme for electric vehicles and supporting components that meet local content requirements.

“Electric vehicle incentives do not only stimulate demand,” Abra said. “They also contribute to job creation, faster investment inflows, and reduced pressure on energy subsidies in the medium term.”

Energy subsidies for 2026 are projected to reach around Rp 210 trillion ($12.39 billion), with the fiscal deficit at risk of nearing, or potentially exceeding, 3% of gross domestic product.

“Over the medium term, expanding the use of electric vehicles can help contain surging fuel and electricity subsidies, while strengthening the competitiveness of Indonesia’s automotive and battery industries,” Abra said.