Total EV sales in Indonesia are forecasted to increase by 69.1% in 2023, with battery electric vehicles leading the growth. The VAT reduction on EVs will contribute to the demand, but the country’s EV penetration rate is expected to remain low at 1.6% in 2023. Without additional incentives, the penetration rate is projected to reach 5.9% in 2032.
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.