The government is currently drafting a new, more targeted electric vehicle (EV) incentive scheme. A key focus of this initiative is to provide larger subsidies specifically for nickel-based electric cars, setting a clear direction for the country’s EV adoption strategy.
This development was announced by Finance Minister Purbaya Yudhi Sadewa, who confirmed that the incentive scheme is still under discussion. He emphasized that this policy is integral to the broader strategy of strengthening the national electric vehicle industry, aiming to bolster domestic production and technological advancement.
According to Minister Sadewa, the incentive scheme will differentiate based on the type of battery technology employed in electric vehicles. The government is also considering various rates for Value Added Tax (VAT) incentives, which would be borne by the government itself, to further stimulate the market.
“The government-borne VAT could be 100 percent or 40 percent; the specific scheme is still being formulated,” Purbaya stated during the APBN KiTa April 2026 press conference in Jakarta on Tuesday (May 5). He clarified that these incentives are primarily intended for non-hybrid electric vehicles, signifying a targeted push towards fully electric models.
He further elaborated that the differentiated scheme will apply to both nickel-based and non-nickel-based electric vehicles. However, the precise technical details of this policy are expected to be unveiled by the relevant ministries at a later stage, ensuring a comprehensive rollout.
“Therefore, EVs utilizing nickel-based batteries will have a different scheme compared to those with non-nickel batteries,” he reiterated. “The Minister of Industry will be responsible for providing further explanations on these specific distinctions,” highlighting inter-ministerial coordination.
Purbaya then disclosed the strategic rationale behind the plan to offer more substantial subsidies for nickel-based batteries. This move, he explained, is aimed at maximizing the utilization of Indonesia’s abundant natural resources, particularly its significant nickel reserves, transforming them into a competitive advantage.
“Why am I proposing higher subsidies for nickel-based batteries?” he posed rhetorically. “Because we want to ensure our domestic nickel resources are actively utilized,” underscoring the nationalistic economic objective behind the policy.
He recalled previous concerns about Indonesia’s potential dominance in the global battery industry, especially as several nations, including China, began developing non-nickel battery technologies. This shift had raised questions about the long-term viability of Indonesia’s nickel-focused strategy.
“I once read that some believed Indonesia’s dream of dominating the battery world was fading because China was adopting non-nickel solutions,” he shared. “So now, we are reversing that narrative; we are committing to utilizing our nickel,” signalling a determined pivot to leverage local strengths.
Beyond resource utilization, Purbaya highlighted that nickel-based battery development is also considered to hold more advanced technological potential. He noted that discussions with experts suggest nickel batteries belong to a more cutting-edge generation, positioning them for future innovation.
“Experts say nickel batteries represent the third generation, while LFP (Lithium Iron Phosphate) batteries are considered second generation,” he concluded. “Our strategy is to move in this direction to maximize the utilization of our valuable resources,” solidifying the government’s dual focus on economic benefit and technological advancement.
Summary
The Indonesian government is developing a new, targeted electric vehicle (EV) incentive scheme that provides larger subsidies for nickel-based electric cars. By differentiating incentives based on battery technology and considering government-borne Value Added Tax, officials aim to prioritize non-hybrid, fully electric vehicles. This strategy is designed to strengthen the domestic electric vehicle industry while positioning the country as a leader in advanced automotive technology.
The core objective of this initiative is to maximize the utilization of Indonesia’s abundant national nickel reserves. By favoring third-generation nickel-based batteries over second-generation alternatives like LFP, the government intends to secure a competitive advantage in the global battery market. Specific technical details and finalized incentive structures are currently being formulated by relevant ministries to ensure a comprehensive national rollout.