Indonesia Governement to Slash Taxes on Electric Cars
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Indonesia plans to scrap some taxes on electric cars as part of efforts to realize the country’s vision of low-emission models making up at least a fifth of all vehicles produced in the archipelago by 2025.
Depending on the model, electric vehicles are currently subject to up to 40 percent luxury tax and up to 40 percent import tax.
Prestige Image Motorcars, the importer of Tesla electric cars, is currently selling the Tesla Model X 75D sports utility vehicle for $200,000 in Indonesia – at almost double its price in the United States, due to the added taxes.
This severely limits the adoption of electric vehicles in Indonesia, restricting it to a niche market, but the government is adamant that it wants to change this.
“The luxury tax on electric vehicles will be zero percent and import tax will be 5 percent. But [it is not yet final], as we are still discussing it,” Industry Minister Airlangga Hartanto said on Monday (26/02).
Lower-priced electric vehicles are expected to increase demand and encourage more people to purchase them. This may in turn convince automakers to establish production facilities here.
Airlangga said the government is currently formulating a roadmap to encourage the local industry to produce more low-emission vehicles, including electric cars.
“We have completed a stage where we produce cheap and energy-efficient cars. Now we need to move fast to build hybrid cars and electric vehicles,” Airlangga said.
The minister said the government has set a target requiring 20 percent of all vehicles produced in Indonesia to be hybrid or electric by 2025.
Questions & Answers
Q.What is the government's aim for low-emission vehicles in Indonesia by 2025?
What is the government's aim for low-emission vehicles in Indonesia by 2025?
The government aims for low-emission models to constitute at least a fifth of all vehicles produced in the country by 2025. This includes both hybrid cars and electric vehicles as part of their strategy.
Q.What taxes are currently applied to electric vehicles in Indonesia?
What taxes are currently applied to electric vehicles in Indonesia?
Electric vehicles are currently subject to up to 40 percent luxury tax and up to 40 percent import tax. This significantly increases their price compared to other markets.
Q.How much could the taxes on electric vehicles be reduced, according to the Industry Minister?
How much could the taxes on electric vehicles be reduced, according to the Industry Minister?
Industry Minister Airlangga Hartanto indicated that the luxury tax on electric vehicles could be zero percent and the import tax could be 5 percent. These proposed changes are still under discussion.
Q.Why does the government want to reduce taxes on electric cars?
Why does the government want to reduce taxes on electric cars?
The government hopes that lower-priced electric vehicles will increase demand and encourage more people to buy them. This strategy also aims to convince automakers to establish local production facilities.
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