Toyota Motor Corp. announced Wednesday it will launch electric vehicle production in Indonesia this year, joining the competition for Southeast Asia’s most populous market where Chinese manufacturers have rapidly gained ground.
Toyota intends to leverage its leading share in the country’s auto market to aggressively expand its sales with the locally produced bZ4X SUV, making Indonesia the third country to manufacture the crossover after Japan and China. The Japanese automaker’s move follows several Chinese rivals into a country that last year introduced tax incentives for locally produced EVs.
Chinese brands including Wuling, BYD and Chery are making inroads into Indonesia’s auto industry by offering affordability, cutting-edge technology and design, challenging Japanese stalwarts such as Toyota, Honda and Mitsubishi. BYD reached sixth place among Indonesian automakers in October with 2,488 units sold that month, while Wuling reported 9,000 EV sales in 2023.
The competitive pressure comes as Indonesia pursues ambitious electrification targets. Indonesia has set a target for 20% of its vehicle production to be electric by 2025, a goal supported by subsidies and tax incentives for EV manufacturers and buyers. The government has introduced a value-added tax discount reducing rates from 11% to 1% for locally-manufactured EVs meeting 40% domestic content requirements.
Toyota’s entry reflects the urgency facing Japanese automakers in a market where Chinese competitors have leveraged Indonesia’s vast nickel reserves—critical for EV batteries—to establish local production. The company previously committed to investing $1.8 billion in Indonesia’s EV sector through 2027.
