Electric Vehicles Drive Indonesia’s Car Sales Growth After 20 Months

Affordable EVs Boost Market Amid Economic Recovery

Rising demand for electric vehicles, particularly from Chinese brands like BYD and Chery, has propelled Indonesia’s car market to its first annual sales increase since June 2023, with a notable 2.2% growth recorded in February 2025. This milestone marks a significant shift for Southeast Asia’s largest automotive market, where total sales reached 72,295 units, up from 70,772 units the previous year, according to data released by the Indonesian Automotive Industry Association (Gaikindo). The surge, largely attributed to the growing popularity of affordable electric cars, comes after a prolonged period of stagnation caused by weakened consumer purchasing power and delays in buying decisions during the 2024 national elections. Industry experts point to improved economic conditions and strategic government incentives as key factors revitalizing the sector, with electric vehicle adoption emerging as a standout trend reshaping Indonesia’s automotive landscape.

The electric vehicle market in Indonesia has gained remarkable traction, driven by cost-effective options from Chinese manufacturers and supportive policies aimed at accelerating EV adoption nationwide. Analysts estimate that battery electric vehicle sales in February 2025 reached approximately 2,100 units, contributing nearly half of the total sales increase for the month. This growth aligns with Indonesia’s ambitious goal to achieve a 20% EV market share by 2025, a target backed by substantial investments and incentives such as a reduced value-added tax of 1% for EV buyers and exemptions from luxury taxes and import duties through the end of 2025. These measures have narrowed the price gap between electric and conventional vehicles, making EVs an attractive option for cost-conscious consumers. Jongkie D. Sugiarto, co-chairman of Gaikindo, emphasized that the availability of budget-friendly electric cars, alongside a recovering economy, has rekindled consumer interest, positioning EVs as a critical driver of Indonesia’s car sales rebound in 2025.

Chinese automakers have swiftly capitalized on this opportunity, establishing a strong foothold in Indonesia’s electric vehicle sector with competitively priced models tailored to local needs. BYD, which entered the market in June 2024, has emerged as a leader, commanding an estimated 36% share of battery EV sales as of November 2024, with projections suggesting it sold around 1,200 units in February 2025 alone. Chery Automobile follows closely, with an estimated 400 units sold, bolstered by models like the Omoda E5, while Wuling maintains a significant presence with approximately 500 units, driven by offerings such as the Binguo EV. Collectively, these brands likely accounted for over 68% of EV sales in February 2025, reflecting their dominance over a segment once controlled by Japanese giants like Toyota, Daihatsu, Honda, and Mitsubishi Motors. BYD’s planned $1 billion manufacturing facility in Subang, West Java, set to produce 150,000 units annually by late 2025, underscores the long-term commitment of Chinese firms to Indonesia, further intensifying competition and promising greater supply of affordable electric vehicles for Indonesian consumers.

Despite the dominance of Japanese brands in the broader car market, the rise of electric vehicles highlights a shifting dynamic, with Chinese manufacturers leveraging Indonesia’s rich nickel reserves and government support to gain ground. The country, a global leader in nickel production, aims to become a hub for EV battery manufacturing, aligning with President Joko Widodo’s vision of producing 600,000 domestically made EVs by 2030. This strategy has attracted significant foreign investment, with companies like BYD and Hyundai establishing production facilities to tap into local resources and meet growing demand. Gaikindo forecasts total car sales of 900,000 units in 2025, a modest increase from 865,723 units in 2024, with EVs expected to play an increasingly vital role as charging infrastructure expands, targeting 32,000 stations by 2030. However, challenges such as limited charging networks and initial cost barriers persist, though ongoing efforts to localize production and enhance affordability are poised to address these hurdles over time.

The broader implications of this growth extend beyond the automotive industry, offering a window into Indonesia’s economic recovery and evolving consumer preferences within this G20 economy. Car sales serve as a reliable gauge of household spending, and the uptick in February 2025 suggests a strengthening financial outlook for Indonesian families. The success of affordable electric vehicles from Chinese brands, coupled with government-backed initiatives, positions Indonesia as an emerging player in the global EV market, balancing economic development with sustainability goals. As new models like Aion Y Plus and Hyptec HT enter the fray, competition is set to intensify, promising consumers more choices and potentially accelerating the shift toward greener transportation. With strategic investments and a focus on local manufacturing, Indonesia’s car market appears on the cusp of a transformative era, driven by the unstoppable momentum of electric vehicle adoption in 2025.