The Indonesian Government will offer a series of incentives to increase production of electric vehicles (EVs) according to Reuters. Indonesia is hoping to become the EV hub of Asia, and wants 20% of all cars produced in the country to be EVs by 2025. The island nation is home to Southeast Asia’s largest economy and hopes to begin production of EVs in 2022.

“By 2022, production of electric-based vehicles should start,” Indonesia’s Minister of Industry Airlangga Hartarto told reporters last week. Hartarto further stated that Toyota has pledged to invest up to $2 billion in Indonesia over the next five years, part of which will be spent on EV production. Japan’s Softbank Group is also considering potential EV investments in the country. Softbank has already promised to spend $2 billion in Indonesia over the next five years through ride-sharing juggernaut Grab.

Nickel -laterite ore, which is used in the production of the lithium batteries found in EVs is naturally plentiful in Indonesia. Government representatives are optimistic that they can create a system to utilize these reserves in producing EV batteries and subsequently, entire vehicles within the country.

“Recently there were a few battery companies which met the (industry) minister, but it is still an initial intention,” Hartarto was quoted as saying. “They see Indonesia has big potential to develop electric-based products due to the availability of raw materials.”

The plan will offer incentives for EV manufacturers, transportation companies, and potential EV buyers. While the official incentive package has not been released, rumors are that it will feature a reduction in import tariffs for unassembled vehicles and machinery, and materials for EV production. Automakers will also be required to gradually place locally sourced materials over imports. By 2030 80% of all materials used to build EVs will have to be locally sourced, while motorcycle manufacturers will only have until 2026 to reach this goal.

Government regulators in Indonesia previously set the goal of a 30% reduction in fossil-fuel emissions by 2030 and a total ban on sales of gas-powered vehicles by 2040. The specifics of how the government plans to make this happen have not been revealed to date.

EV buyers will receive tax breaks on initial purchases, reduced fees at public charging stations, a lower annual vehicle tax rate, and access to special parking spots and highway lanes.

Currently, a BMW X3 sDrive SUV is taxed at a lower rate than a hybrid Toyota Camry because sedans have traditionally been considered a more luxurious type of car. The new rules would impose taxes based on levels of fuel consumption and carbon emissions as opposed to engine size and body type.

President Joko Widodo has stated that he will sign the plan into law when he receives it.  “We can go ahead and prepare the infrastructure to support electric vehicles,” Widodo told reporters last week.

Indonesia’s plan is exciting and ambitious. We here at wish them nothing but success!

What do our readers think about Indonesia’s new plan? Will the country succeed in hitting their stated goals on time or is it just not possible to do in the short time frame? Please leave us a comment and let us know what the future holds.

Source | Image: Wikimedia Commons