Indonesia announced on Thursday that it's extending the deadline by two years for car manufacturers to meet the requirements for electric vehicle incentives in the biggest car market of Southeast Asia. This decision was accompanied by pledges of investment from China's Neta EV brand and Mitsubishi Motors (OTC:MMTOF).
Under the relaxed investment rules, car manufacturers now have until 2026 to pledge that they will produce a minimum of 40% of the components for electric vehicles (EVs) in Indonesia in order to be eligible for incentives. The purpose of setting the 40% benchmark was to promote the local production of batteries.
"The relaxation on the local content requirement is to attract the investors," said minister Agus Gumiwang Kartasasmita at the Jakarta auto show Thursday.
The Indonesian government has set a goal to manufacture around 600,000 EVs by 2030. This target is 100 times higher than the amount of EVs sold in Indonesia during the first six months of 2023.
Minister Kartasasmita said that Mitsubishi Motors (7211.T) had committed about $375 million to expand production, including for the Minicab-MiEV electric car. Mitsubishi said production of the EV would start in December.
However, until now, only Wuling Motors Holdings Ltd (HK:0305) and Hyundai Motor Co DRC (OTC:HYMTF) have shifted enough production to Indonesia to qualify for full incentives. Both have factories outside Jakarta and lead the market in EV sales.