Indonesia to incentivise EV sales

Indonesia will provide new incentives to boost its growing electric vehicle (EV) industry, its government has announced.

The incentive programme will cover sales of 200,000 electric motorcycles and 35,900 electric cars, said industry minister Agus Gumiwang Kartasasmita. It will also cover the conversion of 50,000 combustion engine motorcycles.

The incentives will start from March 20 2023, aiming to attract investment from industry giants such as Tesla, senior cabinet minister Luhut Pandjaitan said.

The two ministers did not disclose the budget set aside for the programme, but said 7 million rupiah (£379.31) will be disbursed to producers and retailers for each new motorcycle sold and for each converted into an electric bike.

“We are finalising negotiations with two big global car producers,” Pandjaitan said, without revealing the names of the carmarkers. “We hope this new policy will make our position much stronger than before.

“If we don’t give (incentives), they will not come to us.”

Pandjaitan added that he plans to talk with the US carmaker Tesla in the coming days, amid rumours that Elon Musk’s company would be looking to build an EV factory in Asia, similar to the one announced for Mexico. 

“Whether it would be Indonesia, we will see,” he said.

The Indonesian government said that companies eligible to join the incentive programme are required to have a plant in Indonesia and meet certain local content requirements.

South Korea’s LG and Hyundai have started construction on plants to assemble batteries and electric cars in the Southeast Asian country. 

Last week, the European Parliament formally approved a law to effectively ban new sales of carbon-emitting petrol and diesel cars by 2035, as part of its push for EVs.

This move has been considered a direct response to the fear that many EU-based companies would relocate to the US in order to obtain access to the Biden administration’s $369bn (£302bn) scheme to subsidise green production.

The EU rules trail similar measures put in place by the UK, which announced in 2020 that a ban on new diesel and petrol cars would be instituted by 2030.

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