Indonesia Emerges as a Key Player in the Electric Vehicle Industry

Indonesia Emerges as a Key Player in the Electric Vehicle Industry

Indonesia, the world’s largest reserve of nickel, has signed over a dozen deals worth over $15 billion with major battery and electric vehicle manufacturers including Hyundai, LG Group, and Foxconn to produce EVs and batteries within the country. The Indonesian government, led by President Joko Widodo, is now targeting Tesla, the world’s most valuable automaker, to establish its presence in the country.

Why it Matters:

Indonesia’s vast nickel reserves, which account for nearly a quarter of the world’s reserves, make it an indispensable player in the electric vehicle industry. The government’s ban on nickel ore exports has forced companies to process and manufacture within the country, resulting in a significant increase in exports of processed nickel to over $30 billion in 2022. Indonesia is expected to account for half of the global production increase in nickel between 2021 and 2025, as demand for electric vehicles surges.

President Joko Widodo has made the development of the electric vehicle industry in Indonesia a personal project, having held talks with Tesla CEO Elon Musk twice and offering Tesla a nickel mining concession and tax breaks to invest in the country. The Indonesian government aims to establish an integrated supply chain for electric vehicle batteries by 2027.

However, the process of making nickel suitable for EV batteries has a high carbon footprint and generates waste that environmentalists fear could be dumped in the ocean, causing concern for potential investors. Despite these concerns, global automakers are investing or sourcing from Indonesia due to limited alternatives and booming demand, and analysts believe that even buyers from developed markets will be forced to buy from Indonesia due to the lack of capacity expansion outside the country. icon

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