Indonesia wants to pioneer EV battery plants in SE Asia, attracts big automakers

MANILA: Indonesia has set its eyes on pioneering EV battery production in Southeast Asia and hopes to create production plants that will start full operation by 2023.

In a bid to move towards zero CO2 emissions, automakers are scrambling to develop hybrids and electric-powered vehicles as mobility solutions. This shift in the trend and direction of car companies has created a void in the market and a need for mass production of lithium batteries for electrified vehicles. Enter, Indonesia.

Indonesia is an archipelagic nation that has an abundant source of natural resources, one of which is nickel ore—a critical component in producing batteries. And as Southeast Asia’s second-largest car production hub, it is but fitting to laterally integrate other aspects of automotive production in the country.

Early in 2019, the Indonesian government announced a program that will offer tax incentives and preferential tariff agreements to EV battery producers and automakers in a bid to attract foreign car manufacturing companies to move more of their business operations, particularly their EV battery production in the country.

According to a report by Reuters, Luhut Pandjaitan, Indonesia’s Coordinating Minister for Maritime and Investment Affairs, the country is looking at manufacturing lithium batteries for use in electric vehicles together with battery chemicals extracted from nickel ore. He said, “We are in coordination with GEM and CATL to build lithium battery plants in Indonesia.”

GEM Co Ltd. and Contemporary Amperex Technology Ltd. (CATL) together with their partner holdings-- Tsingshan Holding Group are Chinese companies that were allowed by Indonesia to build and operate the battery chemical plants. GEM is expected to begin the pre-production phase by August 2020 so that the trial production will be up and running by the end of the year. Currently,

the Chinese companies are still awaiting the necessary environmental permits before they could move forward with the other aspects of the development of the plant. The Indonesian government for their part is optimistic that the environmental impact studies will be completed and submitted by the end of the year.

The car connection

CATL together with EV maker BYD Co. is currently in partnership with Toyota Motors Corp. for battery procurement. The Japanese automotive company is also planning to invest USD 2 billion to develop EV in Indonesia over the next four years. Toyota president Akio Toyoda said,

“because the Indonesian government already has an electric vehicle development map, Toyota considers Indonesia a prime EV investment destination… From 2019 to 2023, we will progressively increase our investment to 28.3 trillion rupiahs ($2 billion).” Toyota will follow the government’s roadmap and begin investing in EV production in stages.

Another Japanese automaker, Mitsubishi Motors Corp., has also expressed their interest in the EV road map that the Indonesian government has developed and has conveyed their commitment as early as mid-2018 to research infrastructure that could accommodate its EV production in the country. South Korean automaker, Hyundai Motor Co., for its part intends to invest an estimate of USD 880 million in Indonesia as part of its bid to start producing its electric vehicles in the country.

Looking ahead

Indonesia will start banning the exportation of nickel ore come January 2020 to make sure that the country’s mining output is processed domestically. Pandjaitan is optimistic that full plant production will be up and running by 2023. Furthermore, the government is eying Patimban in West Java as a potential location for building battery plants due to its strategic location.

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