Jakarta Ends EV Import Tax Perks, Impacting Markets and Auto Sector

Indonesia plans to end tax incentives for imported battery electric vehicles (EVs) starting in January 2026, a move that could slow demand for Chinese EV brands that currently rely heavily on imports, potentially impacting the country's auto sector amid already weakening sales. Concurrently, Indonesia is actively fostering international collaboration in the EV battery industry, notably with Türkiye, focusing on joint research, investment, and technology transfer to bolster regional supply chains and support its growing EV ecosystem. This push aligns with Indonesia's broader strategy to build a competitive battery-based EV industry, supported by a significant investment megaproject and rapid EV population growth. Meanwhile, Indonesia's clean energy future is a geopolitical battleground between the U.S. and China, with China embedding itself deeply in Indonesia's clean energy supply chain through substantial investments, while the U.S. has retreated from key partnerships, affecting political leadership but not the ongoing investments. These dynamics highlight Indonesia's critical role in the global energy transition, balancing economic growth, technological collaboration, and international influence in shaping its energy and EV sectors.