KOLEKSI: ACCELERATING INDONESIA'S ELECTRIC VEHICLE ECOSYSTEM REQUIRES POLICY BREAKTHROUGHS, REFLECTING ON THE SUCCESSES OF NORWAY AND ETHIOPIA

• Norwegian EV dominance: New battery-based electric cars (BEV) accounted for 95.9% of the market share in Norway throughout 2025, proving the effectiveness of VAT removal and long-term infrastructure incentives.

• Ethiopia's Radical Move: Ethiopia became the first country to officially ban imports of internal combustion engine (ICE) vehicles to reduce the foreign exchange deficit from fuel imports and optimize its domestic energy surplus.

• Recommendations for Indonesia: KOLEKSI urges the government to balance fiscal incentives, not only by exempting taxes on the import and production of electric vehicles, but also on manufacturers and importers of charging station equipment (SPKLU).

JAKARTA – The Indonesian Electric Car Community (KOLEKSI) urges faster electrification of national transportation through more structured, bolder regulations. Through a comparative analysis of global policies, KOLEKSI highlights the success of two countries from different economic contexts, Norway as a developed country and Ethiopia as a developing country, in effectively implementing electric vehicle (EV) regulations. 

Based on global adoption data, the effectiveness of the transition to Zero Emission Vehicles (ZEV) depends heavily on state policy interventions, both through aggressive incentive schemes and macroeconomy-based restrictions.

Norway: A Fiscal and Infrastructure Incentive-Based Approach

Norway currently leads the global EV adoption by a very dominant margin. Throughout 2025, the Battery Electric Vehicle (BEV) market share in Norway reached a record 95.9 percent of total new passenger car sales, and this figure continued to rise to nearly 98 percent in the first quarter of 2026. Internal combustion engine (ICE) vehicles have effectively become an exception in the country.

This success did not happen overnight, but resulted from long-term fiscal policy. The Norwegian government abolished the 25% Value Added Tax (VAT) on electric car purchases, exempted registration tax, and offered significant discounts on tolls and public parking.

Norway's high ratio of charging stations has also helped reduce consumers' range anxiety. Economically, this incentive makes BEVs cost as much as, or even less than, conventional vehicles in the same class.

Ethiopia: A Radical Approach Through Import Restrictions

By contrast, Ethiopia is taking a much more radical step to build national economic resilience. In early 2024, Ethiopia became the first country in the world to officially ban imports of ICE-powered passenger vehicles and allow only electric vehicles.

This decision is driven by macroeconomic analysis in which Ethiopia spends nearly US$2 billion annually on fossil fuel imports. By stopping the entry of ICE cars, the Ethiopian government is not only drastically reducing the foreign exchange deficit, but also using surplus electricity from its domestic hydroelectric plants.

As a result, the electric car population jumped from about 7,000 units in 2022 to 115,000 units in the 2025/2026 fiscal year.

Relevance for Indonesia

"These two case studies prove that EV adoption is not just an automotive trend, but a crucial national energy and economic security strategy," said Arwani Hidayat, Chairman of KOLEKSI.

"Indonesia has the capacity to combine these two approaches. We have natural resources for battery production and great renewable energy potential. More precise regulation related to direct tax incentives to consumers and tightening ICE vehicle emission standards will accelerate the Return on Investment (ROI) for public infrastructure while lowering the burden of national fuel subsidies."

We at KOLEKSI underline that aligning regulations between central and regional governments, expanding fast-charging infrastructure evenly distributed outside Java, and providing technical education for the public are fundamental pillars that must be implemented immediately.

Don't Forget SPKLU Providers

In addition, KOLEKSI noted an imbalance in regulations for SPKLU charging device providers.

"Currently, the regulatory scheme in Indonesia is still focused on the vehicle population. The government is aggressively offering red carpets in the form of exemptions from Import Duty and Government-Borne PPnBM (DTP) for importing EVs under the CBU and CKD schemes, on the condition of local production commitments. However, KOLEKSI notes that there is inequality because equivalent radical incentives have not touched the electricity infrastructure supply chain," added Arwani.

The growing EV population will not be absorbed optimally without a massive availability of charging facilities. In fact, SPKLU hardware, especially high-capacity DC fast-charger units, most of which are still imported, often falls under commercial-standard customs tariffs and does not automatically receive duty exemptions like EV car units. Customs still categorizes these tools under Harmonized System (HS) Code 8504, where the import duty is at least 5 percent. This does not include VAT and other taxation components.

"Therefore, special fiscal relaxation in the form of discounts and import tax exemptions for manufacturers and importers of SPKLU devices is necessary. This balanced upstream to downstream policy will reduce capital costs, accelerate Return on Investment (ROI) for private and public SPKLU investors, while reducing the burden of fuel subsidies in parallel," Arwani concluded.

About KOLEKSI

The Indonesian Electric Car Community (KOLEKSI) is a forum for advocacy, education, and communication for users, observers, and stakeholders in Indonesia's electric vehicle ecosystem.

KOLEKSI supports sustainable mobility policies and the energy transition in the transportation sector.

Media Contact:

Indra Alfarisy

PR Consultant, KOLEKSI

088977774464

www.koleksi.club