Indonesia’s electric motorcycle industry is facing a critical inflection point. After two years of growth fueled by government subsidies, the absence of a clear policy in 2025 has triggered a steep decline in sales and production. As manufacturers await decisive action, the future of Indonesia’s EV transition hangs in the balance.
Key Facts & Background
- Subsidy Status:
As of August 2025, the government has yet to confirm whether the electric motorcycle subsidy—previously set at Rp 7 million per unit—will continue. The program, which supported over 63,000 units in 2024, was instrumental in driving consumer adoption and industry expansion. - Stakeholder Concerns:
The Association of Indonesian Electric Motorcycle Manufacturers (Aismoli) has called for clarity from key figures including Coordinating Minister for Economic Affairs Airlangga Hartarto and Industry Minister Agus Gumiwang Kartasasmita. Previously, the program was championed by Luhut Binsar Pandjaitan, now Head of the National Economic Council (DEN). - Sales Collapse:
Without subsidies, electric motorcycle sales have dropped by up to 70% in 2025. Monthly sales have fallen to around 11,000 units, with projections for the year ranging between 25,000–30,000 units—less than half of 2024’s total. - Labor Impact:
Several manufacturers have begun furloughing workers due to declining demand. While not formal layoffs, the move reflects broader production slowdowns and uncertainty across the sector. - Industry Structure:
Indonesia’s electric motorcycle industry remains labor-intensive, with significant potential for job creation if demand rebounds. In 2024, the sector absorbed thousands of workers and contributed to the country’s green industrialization goals.
Strategic Insights
The stalled subsidy policy in 2025 poses a serious threat to Indonesia’s electric vehicle (EV) ambitions, particularly in the two-wheeler segment. Electric motorcycles are a cornerstone of Indonesia’s broader energy transition strategy, offering scalable, affordable, and low-emission mobility for millions. The absence of clear fiscal support undermines both consumer confidence and industrial planning, risking a reversal of hard-won progress.
From a macroeconomic perspective, the electric motorcycle sector represents a vital node in Indonesia’s green manufacturing ecosystem. It supports domestic value chains, attracts foreign investment, and contributes to employment—especially in semi-urban and rural areas. The current policy vacuum not only disrupts production cycles but also weakens Indonesia’s positioning in the global EV supply chain.
The labor implications are particularly acute. With many factories operating on a padat karya (labor-intensive) model, declining orders directly translate into reduced workforce absorption. Furloughs, while temporary, signal fragility in the sector’s employment base. A prolonged subsidy gap could lead to permanent job losses, eroding the social and economic benefits of EV industrialization.
Strategically, the government’s indecision sends mixed signals to investors and global partners. Indonesia has positioned itself as a regional leader in EV adoption, backed by abundant nickel reserves and a growing battery ecosystem. However, inconsistent policy execution—especially in consumer-facing segments—risks diluting that narrative. A clear, multi-year subsidy roadmap would restore confidence, stabilize demand, and enable manufacturers to plan sustainably.
Moreover, the situation underscores the need for integrated policy coordination. While fiscal incentives are crucial, they must be complemented by infrastructure development (e.g., charging stations), regulatory clarity, and public awareness campaigns. The role of institutions like DEN and ministries across energy, industry, and finance must be harmonized to deliver coherent, long-term support.
In the long run, Indonesia’s success in electrifying its transport sector will depend not just on headline investments or pilot programs, but on consistent, inclusive policies that empower both producers and consumers. The electric motorcycle subsidy debate is more than a budgetary issue—it’s a litmus test for Indonesia’s commitment to sustainable industrial transformation.