Tesla and BYD are reportedly wrapping up investment agreements to construct EV production plants in Indonesia on January 17; HT Auto reports citing a senior minister.
“All the top global carmakers are coming to us. BYD, Tesla, Hyundai and others are all finalizing deals with Indonesia.”
Luhut Panjaitan, maritime affairs and investment coordinating minister
Unfortunately, he withheld additional information from the Tuesday meeting with the provincial governments. The auto giants also refrained from giving comments.
What attracts these major companies to invest in Indonesia?
Indonesia President Joko Widodo aims to develop a complete onshore supply chain for electric vehicles. With that supply chain, potential investors would have access to Indonesia’s over 270 million customers and its supplies of essential battery minerals.
Remarkably, that strategy is gaining momentum, given that major battery and EV manufacturers worldwide have started to invest in the country.
For instance, Chinese battery giant CATL announced plans to invest $6 billion in the mining-to-batteries complex in Indonesia.
Meanwhile, Hyundai opened its Indonesian plant in March 2022 to manufacture the country’s first domestically assembled EV.
Government initiatives
Senior Minister Luhut Panjaitan stated at the Tuesday meeting that Southeast Asia’s biggest economy will see $30 billion worth of investments until 2026 for its EV battery supply chain development.
The Indonesian government will also encourage EV adoption by offering subsidies of up to 80 million rupiahs ($5,271) for each EV buyer. However, the specifics are still being worked out.
Moreover, he stated that the cabinet has decided on the “EV matters” without clarifying if it pertains to the subsidy of foreign investment agreements. Nonetheless, the government is set to announce it in the upcoming days.
Indonesia is actively encouraging domestic investments in batteries and electric vehicles. It is only natural for the demand for more battery materials to rise along with EVs.
That said, it is not surprising to see major automakers negotiate with Indonesia as nickel is one of the most critical minerals for EV batteries. Well, nickel is abundant in the country.
