Gov't to Slash Taxes on Electric Cars

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. (Antara Photo/Umarul Faruq)

By : Jakarta Globe | on 8:36 PM February 26, 2018
Category : Business, Automotive

Jakarta. 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.

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