Indonesia's electric motorcycle market is facing challenges due to weak consumer spending and uncertainty regarding government incentives, raising concerns among industry stakeholders about the pace of adoption in South-east Asia's largest vehicle market.

Slowing demand has affected motorcycle manufacturers, the majority of which are local companies, stated Budi Setiyadi, chairman of the Indonesia Electric Motorcycle Association (Aismoli).

"Many companies have scaled back production, and the ripple effects are extensive, affecting not only manufacturers but also component suppliers, many of which are small and medium enterprises," he added.

Uncertainty over government subsidies and mounting economic pressures has reduced consumer confidence, complicating production and purchase planning for manufacturers.

Indonesia's two-wheeler subsidy programme, which ended late last year, accounted for a substantial share of electric motorcycle sales. The programme provided a direct subsidy of IDR 7 million (US$ 420) for each purchase of a new electric motorcycle.

The subsidy typically covered around 20-35% of the total price of a new unit, depending on the model. Prior to the subsidy, most mainstream models were priced between IDR 15 million and IDR 35 million.

Under President Prabowo Subianto, government subsidies for electric motorcycles have been redirected to other spending priorities, reducing financial support for buyers and slowing adoption. In the absence of subsidies and if weak demand continues, total sales for 2025 are projected to remain well below the government's target of 200,000 units, according to Budi.

Other challenges include insufficient charging infrastructure, relatively high upfront costs, and limited consumer awareness, noted a senior executive at a global credit rating agency.

Many Indonesians rely on motorcycles for long-distance travel, particularly during peak periods such as the Eid holidays, when large numbers travel to their hometowns, making range limitations a concern.

Currently, fewer than 2,000 charging and battery swap stations dedicated to electric motorcycles exist nationwide, most of which are concentrated in major metropolitan areas.

Resale value is also an important consideration, stated Suwandi Wiratno, chairman of the Indonesia Multifinance Companies Association.

Most Indonesian consumers purchase vehicles through instalment plans, reflecting a preference for affordable monthly payments. For a typical three-year financing scheme, monthly instalments generally vary depending on the vehicle model and down payment.

"The size of the down payment is especially crucial amid the current decline in consumer purchasing power," Suwandi explained. "If household incomes improve or purchasing power recovers, demand could increase."

Currently, electric vehicle financing accounts for a small portion of the total portfolio of multifinance companies in Indonesia.

B2B segment offers potential

Although retail sales have slowed, the business-to-business (B2B) segment remains a key growth area. The association reported that a significant portion of current sales are driven by businesses, as manufacturers increasingly partner with ride-hailing services, rental fleets, and logistics companies.

Local motorcycle manufacturer Gesits Motor Nusantara reported growth in sales of its electric motorcycles to ride-hailing companies.

Technology company Goto has expanded its electric vehicle operations in Indonesia since 2023 through a partnership with Taiwanese battery-swapping firm Gogoro and the launch of its own electric motorbike brand, Electrum.

R. A. Koesoemohadiani, director of legal and group corporate secretary at Goto, stated that the number of active Gojek driver-partners using electric motorcycles has increased compared with the previous year.

Building consumer accessibility

Manufacturers, including electric motorcycle maker and mobility solution provider Alva, are adjusting strategies to improve accessibility to electric motorcycles without government subsidies.

The company has introduced battery rental and rent-to-own schemes to reduce upfront costs. Its models, priced between IDR 28 million and IDR 45 million, are positioned in the premium segment.

Under the battery rental scheme, buyers pay approximately IDR 20.5 million for the motorcycle and rent the battery separately for around IDR 385,000 per month. The programme has received feedback from consumers, according to Alva's chief executive, Purbaja Pantja.

"Support provided by any source is noted," he said. "The focus is on maintaining practical and affordable solutions for customers."