This Asian country offers up to $5,000 subsidy for EVs. But there's a catch

While a majority of European countries appear to be ready to set a cut-off date for internal combustion engine-powered vehicles, there looms a question ahead of the middle-income and low-income countries. The question is how these countries will adopt the vehicle fleet electrification strategy. Indonesia seems to have an answer. The emerging Asian economy is preparing a subsidy program to boost electric vehicle adoption in the country.

Bloomberg reports that the country is preparing to offer up to $5,000 subsidy for each electric vehicle in the country. However, the condition is that these electric vehicles must be built locally in the country to be eligible for the subsidy. This subsidy program is not limited to pure electric vehicles but covers hybrid cars as well. Hybrid cars will get half the amount of BEVs. Electric motorcycles, on the other hand, will receive a $500 subsidy. Also, the ICE motorcycles converted into EVs will be offered an incentive of $320.

The middle-income country appears to be making a strategic and gradual shift towards electric vehicles from the current internal combustion engine-dominated vehicle lineup. However, despite outlining this strategy, the Indonesian government has not set up any specific timeline for the project implementation. The Indonesian government hopes that the EV incentive will increase the sales of electric vehicles in the country by three times by 2030.

Interestingly, this move from the Indonesian government comes at a time when global automakers are increasingly shifting their focus on building electric vehicles in Asian countries such as Thailand, Indonesia etc. Auto majors like Great Wall, SAIC, Mercedes-Benz and Tesla have already shown their interest in setting up electric vehicle manufacturing plants in Thailand. Being one of the countries from the same region with a large potential market for EVs, Indonesia aims to tap the potential of luring the automakers to set up electric vehicle manufacturing plants there. The fresh subsidy program for electric vehicles is expected to play a key role in that strategy and boost demand for EVs in the country.

Interestingly, Hyundai has already started operations at its Indonesian EV plant, as has Mitsubishi. Another Japanese car giant Toyota has invested in hybrid vehicle production in the country. A few days ago, Toyota showcased an electric Innova concept in Indonesia. Some parts of the vehicle were built in the country.