Jakarta. The Jakarta provincial government will continue to offer full tax incentives for electric vehicles, maintaining exemptions on both annual vehicle tax and ownership transfer fees as part of efforts to accelerate the city’s transition to cleaner energy.

The Jakarta Provincial Government confirmed the policy applies to battery electric vehicles, covering the motor vehicle tax (PKB) and the vehicle ownership transfer fee (BBNKB).

Governor Pramono Anung said the city would align its policy with national directives regarding tax incentives for electric vehicles.

“With regard to electric cars, the Jakarta administration always refers to the central government’s policies,” he said at the East Jakarta Mayor’s Complex on Tuesday.

The move comes as Indonesia’s EV market gains momentum. Battery electric vehicle sales surged 141% year-on-year in 2025 to 103,931 units, hitting a record in December, driven in part by the rising popularity of Chinese brands such as BYD and Wuling.

The incentives follow a directive issued by the Home Affairs Ministry urging local administrations to support electric vehicle adoption through fiscal measures. Lusiana said the move underscores Jakarta’s commitment to promoting environmentally friendly transportation and accelerating the shift toward clean energy.

The city had previously considered a tiered incentive scheme based on vehicle prices, offering up to 75% tax relief for electric cars priced below Rp 300 million ($17,200) and 25% for those above Rp 700 million. However, the plan was shelved to comply with national policy mandating full exemptions.

Indonesia recently revised its vehicle tax framework under a 2026 regulation, removing the automatic exemption for electric vehicles. While the new rules allow such taxes to be imposed, they also give regional governments discretion to grant full or partial incentives.

This means electric vehicle tax policies may vary across provinces, potentially creating uneven adoption rates in different regions.

Officials say maintaining incentives in Jakarta — the country’s largest urban economy — could play a key role in sustaining demand. Electric vehicles currently account for about 15% of Indonesia’s automotive market, according to the Industry Ministry.

Setia Diarta, a senior official at the ministry, warned that higher ownership costs resulting from new tax rules could weigh on sales and production if not carefully managed.

“One thing we must anticipate is that ownership costs will rise if these taxes are applied, which could affect consumer demand,” he said.

Still, authorities believe rising fuel prices may help offset the impact by encouraging consumers to switch from internal combustion engine vehicles to electric alternatives.