2025 Electrification Challenges: EV Prices Still Unaffordable

KatadataOTO – The Indonesian government has a target to achieve NZE (Net Zero Emission) or zero emissions by 2060 or sooner.

Several steps have been taken to achieve this. One of them is through the support of incentives for environmentally friendly vehicles to make them more appealing to the public.

It should be noted that the government provides incentives for a number of models that meet the requirements.

The most affordable is the Wuling Air ev at around Rp 184 million. However, electric cars in that price range have very limited models.

Photo : KatadataOTO

For example, models with a three-row 7-seater configuration are still offered at Rp 300 million and above. Like the BYD M6, which is sold starting from Rp 383 million.

Although the development of electrification in Indonesia is starting to be seen, the challenge that still needs to be faced is the price of electric cars.

“Indeed, electric cars are not cheap. They are still considered expensive,” said Bebin Djuana, an automotive observer, when contacted by KatadataOTO some time ago.

He highlighted the increase in VAT (Value Added Tax) which also played a role in affecting the price of electric cars.

In fact, amidst the various challenges this year, Bebin considers government intervention important, especially in maintaining national car sales this year. The electrification line is no exception.

“Is there any exemption (for electric vehicles from VAT)? No. This is what’s strange,” he said.

The amount of the government incentive for electric cars is 10 percent. Under last year's policy, this meant consumers only had to bear a one percent VAT.

However, with the increase, the tax that needs to be paid by consumers becomes two percent.

Meanwhile, for hybrid cars, the incentive is smaller at three percent. This means the total VAT borne by consumers is nine percent.

Photo : KatadataOTO

“In any country, the government steps in to help its people switch (to electrified vehicles),” said Bebin.

Previously, he suggested that the VAT rate could be lowered for all cars sold in the Rp 1 billion-Rp 2 billion price range. So that people's purchasing power can be rekindled.

Lowering the VAT percentage is considered capable of reviving the automotive industry while also helping the adoption process of electric vehicles, both electric cars and hybrid cars, in the country.