The electrification of road transport is key to reducing reliance on fossil fuels, improving energy security, and limiting greenhouse gas emissions in Indonesia. Yet InfluenceMap’s analysis finds that between 2023 and 2026, Toyota, Suzuki, Honda and GAIKINDO advocated for policy amendments that may delay a full transition to battery-electric vehicles and prolong reliance on oil imports in the road transport sector. Because of their prominent role in Indonesia's automotive market, these automakers will play an influential role in Indonesia's efforts to decarbonize transport: Toyota (including Daihatsu), Mitsubishi Motors, Suzuki, Honda and Isuzu accounted for approximately 74% of Indonesia's total vehicle sales in 2025, and these manufacturers have held leadership roles in Indonesia’s automotive industry group, Gabungan Industri Kendaraan Bermotor Indonesia (GAIKINDO).
Indonesia relies heavily on fossil fuel imports to meet its energy needs: As of 2024, the country imported 38.79% of its gasoline. The transport sector accounts for 36% of Indonesia’s total energy consumption, with oil and gas accounting for 85%. Although the fossil fuel industry often frames continued investments in oil and gas as essential for energy security and affordability, global conflicts repeatedly expose oil-importing countries' vulnerability to price volatility and supply disruptions. Indonesia experienced this firsthand in 2022, when rising oil prices directly impacted the transport sector. The current global energy crisis, stemming from conflict in Iran, shows this vulnerability will not go away without a major shift in the country’s energy mix.
Ahead of the conflict in Iran, Indonesian President Prabowo Subianto announced in December 2025 a plan to “cut dependence on foreign energy” and halt fuel imports through 2030 to achieve “energy self-sufficiency,” starting with eliminating diesel imports from 2026 and increasing biofuel blending. Since then, oil prices have skyrocketed, and Indonesia’s Ministry of Finance warned that it may have to reduce fuel subsidies as oil prices continue to balloon to avoid a bigger state deficit. In response, President Prabowo Subianto doubled down on his energy plan, proposing the electrification of all cars, motorbikes, and tractors to reduce exposure to oil price volatility and reliance on fuel imports.
This proposal builds on Indonesia’s existing policy to encourage a transition to EVs.1 To facilitate Indonesia’s goal of 2 million battery electric vehicles (BEVs)2 by 2030, the Indonesian government introduced purchase incentives for BEVs in 2023, including a reduction in value-added tax (VAT) from 11% to 1% and a 0% luxury goods sales tax. After significant industry advocacy, however, the government extended the luxury goods sales tax incentive to Internal Combustion Engine (ICE)-powered hybrid vehicles,3 with a 3% reduction from the typical 15% of luxury goods sales tax. Although the incentives are not as high as those for BEVs, this amendment may threaten Indonesia’s 2030 BEV goal and perpetuate reliance on imported oil, required for ICE-powered hybrids, as they don't have a plug.
With the National EV Roadmap being discussed and automotive incentives due in mid 2026, advocacy supporting vehicle electrification could translate into tangible, real-world impacts by reducing the sector’s reliance on imported oil. But following Indonesia's April 2026 decision to replace a nationally mandated annual motor vehicle tax exemption for BEVs4 with a regionally determined approach, creating uncertainty and the potential for inconsistent tax treatment across Indonesia provinces, alongside continued industry advocacy, the rapid decarbonization of Indonesian road transport is at stake.
Since late 2025, Putu Juli Ardika, head of the Agro Industry department within the Ministry of Industry (KEMENPRIN), has been the chairman of GAIKINDO’s board. In 2024-2025, Putu was heavily involved in electric vehicle regulations, serving as the Head of the Metal, Machinery, Transportation Equipment, and Electronics Industry Directorate (ILMATE), which is responsible for automotive industry policy and regulation.
Previous InfluenceMap analysis reveals a trend of companies advocating for policies that would embed reliance on incumbent technologies in other markets. In February 2026, InfluenceMap research revealed that several fossil fuel companies, including INPEX, JERA, Mitsubishi, and Mitsui worked to influence Australian government policy on liquefied natural gas (LNG) to expand LNG exports and increase reliance on fossil gas throughout Southeast Asia. Similar advocacy trends appear in the transport sector, where Toyota, Honda, Nissan, Suzuki and the Japanese Automobile Manufacturers Association consistently promoted a “multi-pathway” approach—including ICE-powered vehicles and biofuels rather than full electrification—in annual automotive dialogues with Japanese and Indonesian ministers.
Following Russia’s invasion of Ukraine, automakers’ advocacy in Indonesia aligned with this trend. Despite the energy crisis, automakers remained supportive of fossil-fuel-reliant technologies and appeared to amplify this position via a strategic role within GAIKINDO (Table 2), the country's largest automotive industry association. Together, Toyota, Honda, Suzuki and GAIKINDO pushed three main narratives that undermine BEVs and promote ICE-powered vehicles as advantageous in Indonesia: incentives for ICE vehicles are needed to support market growth, ICE-powered hybrids are better suited to Indonesia, and, decarbonization must be "technology-neutral."
Following this advocacy, in December 2024, Indonesia introduced expanded incentives for “low carbon emission vehicles,” including full hybrids, mild hybrids, and plug-in hybrids (PHEV), with a 3% reduction from the typical 15%, until December 2025.
In 2026, automakers and GAIKINDO recycled the same narratives in their advocacy ahead of the government’s anticipated announcement on future incentives. See InfluenceMap's June 2026 report for more details on the advocacy in the lead up to the December 2024 policy decision.
Automotive Industry Advocacy for Incentives for ICE-powered Hybrid Vehicles and ICE-powered vehicles, 2023–2026
Industry Claim 1: Incentives for ICE vehicles are needed to support market growth. In January 2026, Toyota advocated for incentives for ICE vehicles because “what is important is to encourage the market to grow again in the future." In October 2025, Toyota promoted incentives for Low Cost Green Cars (LCGC)5 and ICE vehicles in the incentive scheme to “target the lower-middle-class market segment.”
Fact Check: While Indonesia’s overall passenger vehicle market has contracted in recent years, EV sales have grown significantly. According to the International Council on Clean Transportation (ICCT), EVs increased from virtually 0% of new vehicle sales in 2020 to 16% in 2025. BEVs, which accounted for 96% of all EV sales in 2025, have overwhelmingly driven this growth, indicating strong and sustained consumer demand for fully electric vehicles.
An April 2026 study by the Institute for Development of Economic and Finance (INDEF) reveals that the energy subsidy burden for ICE vehicles is already nearly eight times higher/unit than for BEVs, costing up to IDR 296 trillion a year nationally (approximately USD 16.5 billion). Approximately 60% of annual vehicle tax revenues are used for fuel subsidies, while EV electricity tariff compensation and incentives account for only approximately 7% of their potential tax revenue.
Industry Claim 2: ICE-powered hybrids are better suited to Indonesia. In June 2025, Honda Prospect Motor described ICE-powered hybrids as a “perfect fit for Indonesia’s current situation.” Nissan highlighted ICE-powered hybrids as better suited to reducing emissions in Indonesia in July 2024, and Suzuki asserted that mild hybrids are the most realistic technology in June 2024. In June 2025, Toyota emphasized BEV emissions, citing Indonesia’s fossil-fuel-dependent energy mix, without advocating for a transition to renewables.
Fact Check: Research by the ICCT, published in February 2026, concludes that BEVs offer significant emissions reductions, even when charged on Indonesia’s current electricity grid, with SUVs achieving 47% emissions savings. With a net-zero 2060 electricity grid, BEVs will achieve 54% lower emissions than ICE- vehicles. Hybrid vehicles running on gasoline, in comparison, reduce emissions by 27%, and a June 2026 Carbon Tracker report further finds that hybrid-heavy transition strategies risk prolonging oil demand.
Industry Claim 3: The decarbonization of road transport must be “technology neutral,” including ICE vehicles. In May 2025, GAIKINDO emphasized that Indonesia should “not only focus on one technology,” encouraging the development of ICE and hybrid vehicles. In February 2026, Toyota advocated for incentives to be “inclusive of all technologies,” asserting that every technology capable of reducing emissions should be included.
Fact Check: The IPCC’s 2018 Special Report on Global Warming of 1.5°C (SR15) finds that greater success comes when government policy prioritizes selected technologies and pathways to decarbonize specific industries, such as electrification and renewable energy. The IPCC’s Summary for Policymakers concludes that electric vehicles powered using low-emission electricity offer the highest potential to decarbonize land transport (SPM-41, C.8).
InfluenceMap’s previous analysis has found that the automotive industry frequently argues for "policy neutrality" and "technology neutrality" to oppose technology-specific government policies. In practice, this often involves promoting alternative technologies that may better align with industry interests but deliver lower emissions reductions than the preferred government policy option. Rather than supporting targeted regulatory measures, these arguments typically emphasize consumer choice, market-led solutions, and limited government intervention.
While ICE-powered vehicles, including hybrids, can run on biofuels and synthetic fuels, gasoline remains the primary fuel for road transport in Indonesia. Efforts to delay a full transition to BEVs may therefore also hinder Indonesia’s ambitions to shift away from imported oil.
The Indonesian Electric Vehicle Industry Association (PERIKLINDO) and the Electric Mobility Ecosystem Association (AEML) have previously raised concerns about continued dependence on fossil fuels. In September 2024, PERIKLINDO argued against incentives for ICE-powered hybrids, citing their continued reliance on fossil fuels and the subsidized consumption of fuel. In August 2025, PERIKLINDO’s Chairman similarly advocated for stronger BEV adoption to reduce Indonesia’s dependence on fossil fuel imports. Likewise, in February 2026, AEML promoted early adoption of BEVs as a strategy to strengthen Indonesia’s energy security and reduce reliance on imported fuels.
In 2026, geopolitical tensions in the Middle East have once again heightened concerns over global oil and gas supply constraints, echoing fiscal and energy security pressures experienced in 2022 following Russia’s invasion of Ukraine. These recurring crises underscore the structural vulnerabilities associated with continued dependence on fossil fuels.
For Indonesia, continued reliance on combustion-engine technology, including through hybrid vehicles, will delay long-term decarbonization in line with scientific guidance and may have fiscal implications. These are already materializing: Indonesia’s rupiah reached a record low in June 2026, attributed to the economic strain from energy imports amid the oil crisis.
Against this backdrop, the BEV purchase incentive policy, scheduled for release in mid 2026, represents a critical opportunity for Indonesia to address its energy security concerns and advance substantial GHG reductions. As the government reviews the policy, close scrutiny of the rationale behind the automotive industry's proposed amendments and their alignment with Indonesia’s ambitions will be necessary to ensure the policy is not disproportionately shaped by obstructive industry actors.
| Industry Association | Performance Band | Organizational Score |
|---|---|---|
| PERIKLINDO | B- | 71% |
| AEML | B- | 74% |
| GAIKINDO | C- | 58% |
| Automaker | Performance Band | Membership in GAIKINDO (2019-2025) | Membership in GAIKINDO (2025-2028) |
|---|---|---|---|
| Nissan | C- | Committee member of Multiple Working Groups | Member |
| Honda | D+ | Co Chairman II | Vice Chairman of Ecosystem and Development Supporting Industry |
| Suzuki | D+ | Co Chairman V | Vice/Secretary of three Committees |
| Mitsubishi Motors | D+ | Co Chairman III | Vice of two Committees |
| Isuzu | D | Chairman | Head of Exhibition and Conference Committee |
| Toyota | D | Co Chairman VI and Head of Working Group in Technology and Electrified Vehicles | Vice Chairman of Future Automotive Technology and Renewable Energy. Head of Committee on Transportation, Environment and Infrastructure |
1 EV - An umbrella term for an electrified vehicle, including battery-electric vehicles, plug-in hybrids and fuel cell electric vehicles.
2 Battery electric vehicle: A fully electric vehicle, powered by rechargeable batteries with no internal combustion engine. BEVs have zero tailpipe emissions.
3 ICE-powered hybrid vehicle: Unlike a BEV, these cannot be plugged in and rely on a combustion engine as the main power source.
4 The annual motor vehicle tax refers to recurring ownership taxes paid throughout a vehicle's operational life. This incentive was separate from the BEV purchase incentive introduced in 2023 and provided exemptions from annual vehicle taxes for eligible EVs between 2022 and 2026.
5 Low cost green car: an affordable, fuel-efficient internal combustion engine vehicle.
*In the 2025-2028 Organizational Structure, GAIKINDO did not disclose the company affiliations of Vice Chairman and the Board. Therefore, some company links may be missing.
