The Government of Indonesia has embarked on an ambitious initiative to advance its green economy through electric vehicle (EV) development, as outlined in the 2025-2045 long-term national development plan. This strategic focus aims to address critical challenges in the transportation sector, which currently accounts for 36.7% of total energy consumption and 9.5% of national greenhouse gas emissions. The government has set ambitious targets for EV adoption, aiming for 1.97 million four-wheeled vehicles (E4W) and 12.9 million two-wheeled vehicles (E2W) to comprise 44% of the national vehicle market share by 2030.
As of September 2024, Indonesia’s EV market shows promising but modest growth, with 43,509 four-wheeler EVs and 152,280 two-wheeler EVs on the road. The infrastructure supporting this transition includes 1,810 public charging stations and 1,882 battery swapping stations, though these are heavily concentrated in Java, particularly the DKI Jakarta region. Sales are primarily concentrated in the middle-price segment, with 55% of purchases falling in the 250-500 million Rupiah range.
The economic impact analysis reveals significant potential benefits under the EV. Impact scenario, which emphasizes domestic manufacturing. GDP growth is projected to increase from 0.01% in 2030 to 2.03% by 2060, driven by domestic value chain development. Indonesia’s strategic advantage in battery production is supported by its control of 42.3% of global nickel reserves, attracting significant investments from global manufacturers including Toyota ($1.8 billion), BYD ($1.3 billion), and LG Energy Solution ($9.8 billion).
From a social perspective, the transition to EVs presents substantial employment opportunities under the domestic manufacturing scenario, with projections indicating 500,000 new jobs by 2030, expanding to 1.7 million by 2045. However, this transition requires significant workforce transformation, with new skills needed in electrical systems, battery technology, and digital manufacturing. The existing automotive workforce will require substantial upskilling, with particular emphasis on technical and analytical capabilities.
Environmental impact assessments demonstrate positive outcomes from EV adoption, showing a 14.8% reduction in overall GHG emissions compared to conventional vehicles. These benefits are expected to increase as Indonesia transitions to renewable energy sources, with the environmental pillar score in the Green Economy Index projected to reach 86.76 by 2060 under the LCDI NZE scenario. However, significant challenges remain, including the current high reliance on coal-based electricity (62.7% of production), environmental impacts from nickel mining, and limited battery recycling infrastructure.
Key challenges facing Indonesia’s EV development include manufacturing and supply chain limitations, particularly in meeting domestic content requirements (TKDN) and reducing reliance on imports for critical components. Infrastructure challenges persist in the form of insufficient charging network coverage and geographic concentration of facilities. Market development faces obstacles including high upfront costs limiting adoption and consumer concerns about battery life and maintenance.
To address these challenges, comprehensive policy recommendations have been developed across economic, social, and environmental dimensions. Economic recommendations focus on maintaining and expanding purchase subsidies and tax rebates through 2030, implementing progressive taxation on conventional vehicles, and supporting flexible financing options for EV purchases. Social policy recommendations emphasize workforce development through comprehensive training programs, establishing a sectoral skills council for curriculum alignment, and developing standardized certification frameworks. Environmental policies prioritize clean energy integration in manufacturing and charging, smart grid infrastructure development, and implementation of sustainable mining standards.
The analysis concludes that Indonesia’s EV development shows significant potential for advancing the country’s green economy objectives, with projected improvements across economic, social, and environmental dimensions. Success requires comprehensive policy implementation, strong institutional coordination, and balanced consideration of economic development with environmental protection and social equity. The findings suggest that prioritizing domestic manufacturing capabilities while maintaining environmental standards represents the optimal path forward for Indonesia’s green economy transition.
