Indonesia’s Ambition to be the World-Class Battery Producer
The world is going to be powered by the battery. In the near future, your car will be an electric car that requires a massive amount of batteries. Indonesia is preparing to take the spotlight as a battery producer to prepare for the upcoming transition from combustion engines to electric cars. The country has one of the biggest nickel reserves globally, as it will be one of the battery’s components. Confident with the reserves, the government started to attract investment from several overseas companies. Here are several investments and potential investments that will potentially make the country an important battery producer.
One of the most recently discussed potential investments came from President Jokowi’s visit to Elon Musk’s Space X headquarters in Boca Chica, United States. The attractive aspect of battery factory investment in Indonesia is the supportive ecosystem. IMIP (Indonesia Morowali Industrial Park), INCO (Vale Indonesia Limited), and ANTM (Aneka Tambang Limited) are companies that are ready to support processed minerals such as nickel to the battery manufacturer.
South Korean manufacturing giant, LG, invests $9bn in Indonesia to build an Electric Vehicle supply chain in Indonesia. This supply chain will provide a mines-to-manufacturing vehicle supply chain. The project is an agreement between LG, ANTM and Indonesia Battery Corporation (IBI).
Contemporary Amperex Technology Co. Limited (CATL), one of the suppliers of Tesla EV batteries, also invested nearly $6bn in Indonesia. The Chinese giant also invested in a mining-to-battery manufacturing ecosystem. The project is also joined by ANTM and IBI.
If Tesla invests in Indonesia, they will not be the first Electric Vehicle manufacturer. Hyundai is the first to test the water with their first locally-assembled EV Hyundai IONIQ 5. Hyundai manufacturing plant in Cikarang, West Java, is operating. The annual plant capacity for IONIQ 5 alone is 250,000 vehicles annually.
What is the significance for you as a customer?
Indonesia plans to achieve zero net emission by 2060. The country also targets to produce two million EVs by 2025. As automotive customers in Indonesia, you need to prepare for a massive transition period. The government could “force” you to buy an EV within the next few years. They could remove the subsidies for fuel. After that, they could subsidize EVs to make it more affordable.
There are many scenarios that the government could do to achieve the net-zero emission target. Whether you care or not about the transition, it is already happening. The government will provide charging infrastructure when the number of EV owners is adequate. Hence, the investment will be profitable.
Shoutout to Kienand Lauw (@KeeNand__) from Twitter who inspired me to write this article