Jakarta. Indonesia’s planned Rp3 million ($169) incentive for electric motorcycle purchases could help accelerate adoption, but the government must ensure the program strengthens domestic manufacturing and supply chains rather than fueling imports, according to the Energy Shift Institute.

The government is preparing Rp3 trillion to subsidize up to 1 million electric motorcycles under the new program. Finance Minister Purbaya Yudhi Sadewa has said the incentive could be launched as early as September 2026.

However, Putra Adhiguna, managing director of the Energy Shift Institute, said the incentive should deliver more than a temporary boost to sales by strengthening domestic manufacturing, supply chains and the use of locally made components.

“The government needs to be careful so the policy does not trigger a wave of imports and temporary assembly operations without actually building the domestic industry,” Putra said.

Indonesia’s electric motorcycle market remains relatively small despite the growing number of manufacturers. From 2020 through April 2026, the cumulative number of electric two-wheelers in the country reached 242,909 units. The number of registered manufacturers has increased to 69 brands, but annual sales fell from 77,000 units in 2024 to 55,059 units in 2025.

Putra urged the government to evaluate previous electric motorcycle subsidy programs and establish clear targets for manufacturers receiving government support. The success of the new incentive, he said, should be measured not only by higher sales but also by increased production capacity and stronger local supply chains.

The Rp3 million incentive is lower than the Rp5 million subsidy previously discussed and has been adjusted to reflect current market demand and domestic production capacity.

Purbaya has said limited domestic production capacity is one of the factors that could make it difficult to reach the 1 million-unit target in the near term. The government does not expect the entire Rp3 trillion budget to be spent in 2026, with implementation to be adjusted based on domestic production capacity and consumer demand.

Putra also said the program should take into account the purchasing power of middle- and lower-income consumers. Vehicle reliability, driving range, charging and battery-swapping infrastructure could all affect whether demand for electric motorcycles grows sustainably, he said.

He also urged the government to maintain quality standards for electric motorcycles and batteries to preserve consumer confidence.

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