In 2023, total EV sales in Indonesia are expected to increase by 69.1% to 17,500 units, with battery electric vehicles leading the growth due to more companies introducing fully electric models. The demand will be driven by a VAT reduction and it is predicted that the EV penetration rate will be 1.6% in 2023 and may reach 5.9% in 2032 with additional incentives to lower costs for consumers.
Key View: We forecast total EV sales to rise by 69.1% in 2023 to reach around 17,500 units. Battery electric vehicles will lead the growth in volume terms as more automakers launch fully electric models. Demand will also be driven by a value added tax reduction, as EVs will attract a VAT of 1%. Indonesia will achieve an EV penetration rate (total EV sales as a % of total sales) of just 1.6% in 2023. We expect EV penetration to reach a high of 5.9% in 2032 absent direct EV purchase incentives aimed at lowering costs for consumers beyond the VAT reduction.