Written by Jennifer Wang, Director of Financial Innovation at New Energy Nexus
Anyone who lives in or has visited Jakarta will have seen the motorcycles: slipping between cars, gathering at intersections, carrying passengers, food orders, parcels, tools, and stock for small businesses. They are often treated as part of the traffic problem, but in Indonesia they are the backbone of the transportation system. With around 139 million two-wheel vehicles on the road, Indonesia’s motorcycle market is the third largest in the world, but less than 1% of those are electric.
This is why the energy crisis is hitting Indonesians hard.
State-owned energy company Pertamina raised the price of its flagship Pertamax gasoline by more than 30 percent in June, from Rp12,300 to Rp16,250 a litre. This is causing consumers to take a hit to their personal income, or else switch to the lower grade government-subsidized Pertalite fuel, which some fear could cause long-term damage to their vehicles. Long queues have already been observed at many gas stations across the country, and there is no telling how long the government will be able to continue to shoulder the growing cost of subsidizing Pertalite, despite assurances from the energy minister.
The solution seems obvious: reduce the nation’s dependence on fossil fuels.
In fact, Indonesian President Prabowo Subianto has framed reducing dependence on imported fossil fuels as a strategic national priority and the country already has ambitious targets for EVs. But accelerating EV adoption, especially two-wheelers, will require a multipronged approach that includes policy and financial solutions.
For drivers, couriers, and low-to-middle income households, multiple barriers are holding back the switch to electric motorcycles. Government incentives have been inconsistent, with the 2023 purchase subsidy introduced and then withdrawn less than two years later. And consumers remain hesitant, wary of a technology that hasn’t yet earned their trust or proven its resale value.
Beyond that, the EV landscape is fragmented, dominated by over 65 young local brands rather than the household names like Honda and Yamaha that anchor the internal combustion engine (ICE) market. Upfront costs are higher than traditional ICE vehicles, with little affordable financing to bridge the gap, and the charging, swapping, and repair infrastructure that ICE riders take for granted is nascent and uneven for EVs — growing, but nowhere near the density or reliability riders need.
Adoption is lagging
Electric motorcycles are already cheaper to operate: according to think tank RMI, the total cost of ownership of an electric motorcycle is at least 34% lower than an equivalent ICE vehicle, freeing up income for food, school, utilities, and other household needs.
Yet adoption remains far below its potential, with electric motorcycles accounting for fewer than 230,000 units, or less than 1% of the total fleet. Annual electric motorcycle sales reached only around 55,000 units in 2025, less than 1% of new motorcycle sales.
The gap between ambition and reality is also striking. The previous administration set a target of 13 million electric motorcycles on Indonesian roads by 2030, but even optimistic industry projections put annual electric motorcycle sales at around 1.9 million by 2030.
Electric motorcycles, despite representing arguably the strongest energy security opportunity, have received comparatively less policy attention. Responsibility for the EV transition is split across the energy, industry, finance, and transport ministries, and coordination among them has remained weak, with no single institution effectively driving it. Indeed, much of Indonesia’s recent EV momentum has centered upstream, on nickel mining and processing – of which Indonesia is the producer for the world – and battery materials.
Financial barriers to adoption
Policy, however, only gets us so far. The biggest barrier for consumers is the high upfront cost. Electric motorcycles remain approximately Rp5-6 million (US$280 to US$336) more expensive than comparable conventional motorcycles and financing is one of the most significant obstacles to wider adoption.
While around 80-90% of conventional motorcycle purchases in Indonesia are financed according to our own stakeholder interviews, only a small fraction of electric motorcycle buyers currently access the formal lending market. Where loans are available, the terms are often less favorable than those offered for conventional motorcycles.
Furthermore, as households come under financial pressure, consumers often delay major purchases, including vehicles. This creates an important challenge for the EV transition. Even if electric vehicles offer lower operating costs over the long term, their upfront cost can remain out of reach for many households, particularly when there is not a robust secondary market that could give consumers comfort that they can quickly sell their vehicle for cash if financial pressures mount. This reality highlights why affordability matters just as much as technology.
These conditions reflect legitimate concerns among lenders, too. Electric motorcycles are still a relatively new asset class, with limited data on battery performance, resale value, and long-term reliability.
The same concern that consumers have about being able to liquidate their vehicles in a pinch also affects lenders and the residual value they would receive for the vehicle if it had to be repossessed. The fragmented EV landscape and less developed after-sales market also increase the risk that a borrower would be unable to make payments on the loan if a faulty vehicle prevents the driver from utilizing it for their livelihood. The result is that financing often becomes inaccessible for the very consumers who stand to benefit most from lower operating costs, particularly ride-hailing drivers, delivery workers, and low-to-middle income households.
The solutions that need scaling
Several Indonesian companies are experimenting with financing models designed specifically for the realities of the country’s motorcycle market.
One example is Indonesian EV startup’s Cocoride platform, which combines battery-swapping infrastructure with rent-to-own financing and provides drivers with access to electric motorcycles without many of the barriers associated with conventional vehicle loans. Through daily repayment structures, remote monitoring technology, and rapid vehicle redeployment, the model is designed around the realities of Indonesia’s informal and platform-based workforce. Along with Cocoride, there are a handful of other innovative financing structures being deployed (Electrum, Aizen, and Blitz Electric Mobility are just a few) that help these livelihood drivers access the significant benefits of driving and owning an electric motorcycle.
What these innovations have in common is an understanding that the challenge is not simply selling electric motorcycles. It is designing financial products and support systems that match how Indonesians actually earn, spend, and use transportation assets.
This is also where new policy and financing solutions can play an important role. Across emerging markets, governments, financiers, and development institutions are increasingly exploring tools such as guarantee facilities, blended finance structures, and risk-sharing mechanisms that can reduce lender exposure and unlock private capital for electric mobility. Policy interventions are being designed to support this mobilization, as well as to align with countries’ domestic manufacturing and industrial policy goals.
The opportunity
The clean energy transition that protects Indonesia from the next geopolitical oil shock also builds a domestic industry, creates jobs in manufacturing and battery production, and lowers the cost of mobility for the millions of Indonesians whose livelihoods depend on two wheels.
To accelerate adoption, Indonesia will need coordinated solutions that reduce the initial financial burden on consumers and help get more electric motorcycles on the road to create a secondary market. New Energy Nexus and UC Davis’ Global South Center for Clean Transportation are exploring possible policy and financing solutions, such as fiscal and non-fiscal policy, blended finance schemes, consumer and lender education, and mobility-as-a-service schemes.
This moment of crisis creates an opening to supercharge a mass transition to EVs.
Not only will a transition to electric two-wheelers support Indonesia’s emissions reduction targets, it will also offer financial stability for the millions of Indonesians who rely on their motorcycles to support their livelihoods.
