Jakarta. The Indonesian government is preparing a subsidy of Rp 3 million ($169) for each electric motorcycle, lower than the Rp 5 million initially considered and well below last year’s Rp 7 million incentive, Finance Minister Purbaya Yudhi Sadewa said on Thursday.

The government is allocating Rp 3 trillion ($169 million) for a program targeting the purchase of 1 million electric motorcycles, although Purbaya acknowledged that the target will not be reached this year.

“The target of 1 million units certainly won’t be achieved this year. If I’m not mistaken, the subsidy is Rp 3 million per unit with a Rp 3 trillion budget,” Purbaya said in Jakarta.

He cited limited domestic electric motorcycle production capacity as one of the main reasons the 1 million-unit target would be difficult to achieve in the near term.

Purbaya estimated that only around 100,000 electric motorcycles -- or 10% of the target -- could be produced and qualify for the incentive by the end of this year.

“National production capacity has not reached 1 million motorcycles. I think it will be 100,000 units at most by the end of the year,” he said.

In addition to production capacity, the government will consider market absorption and consumer demand for electric motorcycles. Actual sales will be evaluated in determining how much of the incentive budget is ultimately used and whether the program should be continued.

Given those constraints, the government does not expect the entire Rp 3 trillion allocation to be spent in 2026. The program will be implemented in line with domestic electric motorcycle production and consumer demand.

The incentive is intended to stimulate domestic electric vehicle production while encouraging consumers to switch from gasoline-powered motorcycles to electric models.

President Prabowo Subianto previously said the government wanted to boost domestic electric motorcycle manufacturing through substantial incentives.

“We will provide significant incentives for those capable of producing 1 million electric motorcycles domestically through Indonesian companies,” Prabowo said.

The broader vehicle electrification program is also aimed at reducing fuel consumption and easing the government’s energy subsidy burden.

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