Indonesia’s Electric Vehicle Market in 2025 and What Awaits Investors in 2026

Indonesia’s Electric Vehicle Market Reaches a Turning Point

The electric vehicle market in Indonesia entered a decisive phase in 2025. Strong investment inflows, expanding production plans, and government-backed incentives positioned the country as a rising hub for electric mobility in Southeast Asia. At the same time, policy signals indicate that 2026 will mark a transition, shifting from import-led incentives toward domestic manufacturing and long-term industrial competitiveness.

For foreign investors, this transition brings both risk and opportunity. Those who understand the direction of policy and prepare early stand to benefit the most from Indonesia’s evolving EV ecosystem.

2025 Highlights: Strong Momentum Across the EV Industry

Investment in New Energy Vehicle Projects Accelerates

Throughout 2025, Indonesia recorded substantial investment growth in the EV sector. According to Indonesia Business Post, investment in low carbon and electric vehicle related projects reached approximately IDR 22.37 trillion, reflecting strong confidence in Indonesia’s long-term role within the global EV supply chain.

This investment covers not only vehicle assembly, but also battery ecosystems, components, and supporting infrastructure. Indonesia’s advantage lies in its nickel reserves, young workforce, and government commitment to downstream processing.

OEM Commitments Signal Manufacturing Confidence

2025 also saw concrete commitments from major EV manufacturers. One of the most notable developments was BYD’s confirmation that it plans to begin local EV production in Indonesia in the first quarter of 2026, as reported by Kontan.

This move signals a shift from imported units toward local assembly and production. It also reinforces Indonesia’s ambition to move up the value chain in the EV industry.

Incentives Still Support Market Growth in 2025

Government incentives for fully built electric vehicle imports helped drive adoption and market penetration in 2025. These incentives reduced prices and encouraged early consumer adoption, allowing brands to test demand before committing to manufacturing facilities.

However, these incentives are not permanent.

2026 Risks and Potential as Incentives End

End of CBU EV Import Incentives

According to BCA Sekuritas research, Indonesia is expected to end incentives for CBU electric vehicle imports in 2026. This policy shift will directly impact brands that rely solely on imported EVs without local production.

For some players, this presents a short-term risk, including higher prices and reduced competitiveness. For others, it creates a clear incentive to localize production.

Manufacturing Becomes the New Priority

From 2026 onward, Indonesia’s EV strategy will increasingly favor companies that commit to local manufacturing, component sourcing, and workforce development. This marks a transition from market entry to industrial consolidation.

The potential upside is significant. Investors who localize can benefit from supply chain incentives, access to domestic demand, and Indonesia’s export potential within ASEAN.

What Foreign Investors Can Gain From 2026 Onwards

Long-Term Positioning in the EV Manufacturing Chain

Foreign investors entering from 2026 onward can position themselves within:

• EV assembly and manufacturing plants
• Battery and component production
• Supporting industries such as electronics, software, and charging infrastructure
• Skilled workforce development tied to advanced manufacturing

Indonesia’s focus on new energy vehicle ecosystems creates room for both OEMs and tier-one suppliers.

Access to Resources and Regional Markets

Indonesia offers strategic advantages, including access to raw materials, competitive labor, and proximity to fast-growing ASEAN markets. Investors who establish operations locally can reduce costs and build resilient supply chains.

How Business Hub Asia Supports EV Investors

Navigating Indonesia’s EV transition requires more than capital. Regulatory compliance, workforce readiness, and proper documentation are critical success factors.

Business Hub Asia supports foreign investors through:

HR Recruitment and Workforce Setup

• Recruitment of technical, engineering, and operational staff
• Assistance with local HR structure and compliance
• Employer of Record solutions for early-stage operations

Business Establishment and Licensing

• Company setup for EV manufacturing and supporting services
• Assistance with industrial licenses and operational permits
• Coordination of investment approvals and reporting

Documentation and Immigration Support

• Work permits and visas for foreign directors and technical experts
• Employment contracts aligned with Indonesian labor regulations
• Compliance with manpower reporting requirements

By handling these critical components, investors can focus on production, partnerships, and market expansion.

Conclusion

Indonesia’s electric vehicle market has delivered strong momentum in 2025, but 2026 will define the winners. As import incentives phase out and manufacturing becomes the core focus, foreign investors must act early to secure their position.

This transition creates a clear opportunity for companies ready to establish local operations, build compliant teams, and align with Indonesia’s industrial direction.

Business Hub Asia is ready to support you.
From HR recruitment and workforce planning to company setup and required documentation, we provide end-to-end assistance to help EV manufacturers and suppliers enter Indonesia with confidence.

If you are planning EV manufacturing, component production, or expansion from 2026 onward, now is the time to prepare. Contact our team to discuss recruitment strategies, licensing pathways, and compliance requirements tailored to Indonesia’s EV ecosystem.