Indonesia’s growing EV fleet is saving billions from the oil price shock

Indonesia’s expanding electric vehicle (EV) fleet is providing significant fiscal relief amid soaring global oil prices driven by the Middle East conflict. In 2025 alone, the country’s EVs helped save over Rp100 billion (approximately $5.8 billion) in public spending by replacing millions of litres of imported liquid fuels with domestically generated electricity. These savings are particularly crucial as Indonesia faces rising crude oil prices that exceed the assumptions built into its 2026 state budget, compounded by a weakening rupiah that makes oil imports increasingly expensive. The nation’s heavy reliance on imported oil—about 60% of its consumption—has long posed economic risks, especially given the government’s policy of subsidising fuel prices to keep them affordable for the public. In 2024, fuel subsidies accounted for roughly Rp130 trillion ($7.6 billion), a figure now under greater strain due to recent price surges. Every dollar increase in oil prices adds hundreds of millions of dollars to Indonesia’s fiscal deficit, highlighting the vulnerability of the economy to global energy market fluctuations. Indonesia’s EV fleet, which grew to nearly 179,000 electric four-wheelers by the end of 2025, has begun to alleviate some of this pressure by shifting energy consumption from imported fuels to domestic electricity. The national utility, PLN, recorded a 139% increase in EV charging electricity consumption over the year, reflecting the rapid adoption of electric vehicles. The cost to the government of compensating for electricity subsidies for EV charging is substantially lower than the fuel subsidies it would otherwise pay for conventional vehicles, with savings amplified in larger commercial vehicles that consume more fuel. Despite these promising developments, the future growth of Indonesia’s EV sector is at risk as key fiscal incentives expired in 2025. Without renewed government support, the expansion of the EV fleet—and the associated economic benefits—could stall. Experts suggest extending incentives to commercial vehicles and implementing zero-emission standards for all road vehicles to sustain momentum. Such measures would not only deepen energy security but also enable Indonesia to redirect billions currently spent on fuel subsidies towards critical public investments in infrastructure and social services.