A system dynamics modeling of incentive policies to increase electric vehicle adoption in Indonesia

Abstract

Indonesia's electric vehicle (EV) adoption remains limited despite various government incentives. This study employs system dynamics modeling to evaluate the effectiveness of fiscal policies, such as purchase subsidies, VAT reductions, electricity incentives, and infrastructure support, in accelerating EV adoption and reducing carbon emissions. The model consists of three interconnected subsystems: fiscal budget (APBN), EV adoption behavior, and carbon emission mitigation. Simulation results show that purchase subsidies and VAT incentives significantly increase EV uptake, especially in the motorcycle segment. However, when electricity tariff incentives are introduced in 2026, public purchasing intention grows more sharply, demonstrating that bundled policies are more effective. The model also reveals long-term fiscal pressure as a limiting factor, and emphasizes that EV adoption alone cannot significantly reduce national emissions without decarbonizing the electricity grid. This research highlights the importance of integrated policy strategies combining fiscal, infrastructure, and behavioral interventions. It offers a systems-based perspective for designing sustainable and inclusive EV transition policies in Indonesia.