Mobilizing Electric Two-Wheeler Finance in Indonesia 

Indonesia’s electric two-wheeler (E2W) market has made significant progress in recent years, supported by government initiatives, growing model availability, and investments across the EV value chain. However, with the phaseout of vehicle purchase subsidies, financing will become an increasingly important driver of market growth to meet the country’s electrification targets of 13 million E2Ws and 2 million electric four-wheelers by 2030.  

E2Ws already offer a lower total cost of ownership than comparable gas-powered motorcycles. However, these long-term savings only translate into higher adoption if financing keeps up-front costs and monthly repayments affordable. Therefore, financing terms, particularly down payments, loan tenors, and interest rates, play a critical role in determining consumer uptake. 

The barriers 

Unfortunately, E2W financing remains concentrated among a relatively small number of multifinance companies, with limited participation from commercial banks.  

This reflects three fundamental risks that continue to constrain lending:  

1. Product and technology risk from varying product quality, limited long-term performance data, and uncertainty around battery durability and after-sales support.  
2. Residual value risk due to the absence of a mature secondary market and standardized methods for assessing battery health, making asset recovery difficult to predict.  
3. Demand and policy risk reflecting the concentration of E2W deployment in commercial applications and uncertainty surrounding long-term market growth following the withdrawal of purchase subsidies. 

EV market risks 

A comprehensive de-risking framework 

This report proposes a de-risking framework built around four complementary intervention areas.  

1. Capital and credit enhancement mechanisms to reduce lender exposure and lower the cost of capital during the early stages of market development. 
2. Innovative business models to improve the bankability of E2W assets by aggregating demand, reallocating risks, and creating more predictable cash flows.  
3. Asset value protection mechanisms to strengthen confidence in long-term vehicle performance and asset recovery.  
4. Market infrastructure interventions to establish the information and institutional foundations needed for evidence-based underwriting, insurance pricing, and asset valuation. 

Ultimately, strengthening E2W finance is not an end in itself. A robust, competitive, and self-sustaining financing ecosystem will accelerate Indonesia’s transition to electric mobility, reducing dependence on imported fuels, delivering cleaner air, lowering greenhouse gas emissions, and ensuring more affordable transport for households and businesses across the country. 

The authors would also like to thank the Drive Electric Campaign for their generous support that made this report possible.