EV Battery Opportunity in Indonesia


Indonesia has the potential to become a major player in the electric vehicle space, particularly in the EV battery industry. It has the largest nickel reserves in the world. Nickel is an important raw material in the battery and electric cars industry. The archipelago is home to about one-fourth of the global nickel reserves, offering Indonesia an advantage over its peers.

Indonesian President Joko Widodo has emphasised, that Indonesia must transform from a big commodity-driven economy to a commodity utilization and industrial economy by developing downstream businesses in the extractive industry. The country has a special focus on the downstream nickel processing industry.

Globally, the adoption of electric vehicles is witnessing rapid growth. Sales are expected to increase at a faster rate in the latter half of the decade. Consequently, the demand for electric vehicle battery packs will pick up.

The Indonesian government, which acknowledges the enormous opportunity and the importance of the battery ecosystem, is aggressively focusing on integrating the upstream and downstream segments of the nickel value chain to facilitate battery pack production.

The administration intends to create a regional battery hub in the country. It aims to develop two of the most prominent lithium-ion battery combinations used in electric vehicles today – 1. Nickel-cobalt-manganese and 2. Lithium-cobalt-nickel-aluminium. This is primarily because battery technology is gradually shifting to the use of nickel as a cathode material. The following chart indicates how nickel content has increased with each advancement in battery technology.

15june 2

Source: Bloomberg NEF

Note: LCO: lithium cobalt oxide; NMC: lithium nickel manganese cobalt oxide; NCA: nickel cobalt aluminium oxide

In March 2021, the Indonesian government launched Indonesia Battery Corporation (IBC), with a planned investment of US$17bn. It is formed by bringing together multiple industry stakeholders: state-owned mining companies MIND ID and Aneka Tambang (ANTAM), state-owned utility Perusahaan Listrik Negara (PLN), and state-owned oil company PT Pertamina. MIND ID and ANTAM will be responsible for mining and processing raw materials, including nickel, while PT Pertamina and PLN will enable battery cell manufacturing and rollout of EV charging stations across the country.

Indonesia has already started to gain traction in the battery ecosystem space because of these growth initiatives and its strong intent to position itself as a battery manufacturing hub in Southeast Asia. Taiwan-based Foxconn announced to launch an investment to manufacture electric vehicles and batteries in Indonesia in the third quarter of 2022. The company plans to partner up with IBC, PT Indika Energy and Taiwanese electric scooter vendor Gogoro for a wide scope of investment on EVs. Moreover, South Korea’s Hyundai launched the first EV assembly plant in Indonesia in 2022, looking to manufacture an average of 250,000 units of their latest model, IONIQ 5 annually.

The country is targeting production of two million electric vehicles by 2025, a vision that is part of their zero net emissions goal by 2060. To aid this goal, the government has even lifted import duties on EV parts. A $15 billion framework agreement between the Indonesian government and battery makers LG Chem and Contemporary Amperex Technology (CATL) aims to create a battery industry in the country.

The state is also in talks with potential investments from Tesla and Toyota. Although Indonesia does not have a concrete investment plan from Tesla, albeit Elon Musk, the company’s CEO, is in close touch with the administration. Indonesian President Joko Widodo met with Musk while on his way home to Jakarta and a day after attending a U.S.-ASEAN summit in Washington. While no investment deal has yet been officially finalized, Tesla’s much-awaited new Asian Gigafactory is reportedly inching closer to reality in Indonesia.

Indonesia believes this is just the beginning of its journey towards creating a robust EV battery ecosystem and it offers enormous investment opportunities in this field.

WHAT YOU WANT

Topics

Accelerating...
The...
Aligning...

More Article