Policy Brief

The role of supply-side regulations in meeting Indonesia’s 2030 electric vehicle target

Indonesia aims to have 2 million electric vehicles (EVs) on its roads by 2030. The projections in this brief suggest that, even with continued fiscal incentives such as the reduced Value Added Tax for qualifying EVs, EVs will only account for 12%–18% of new car sales by 2030, short of the target. To meet the target, sales of EVs must grow much faster and reach about 49% of new cars by 2030.

The authors analyze how two options for supply-side regulations—fuel consumption standards and EV sales requirements—could help accelerate the EV transition in line with Indonesia’s goals. Both regulations have proven effective in other major markets and at almost no cost to the national budget (the only costs are monitoring and enforcement). Although this paper focuses on passenger cars, these types of supply-side policies can be designed and implemented for two-wheelers, light commercial vehicles, and medium- and heavy-duty vehicles.