Indonesia:Talks with Tesla on EV battery plant still in progress

A Tesla car has its batteries recharged. - Bloomberg

JAKARTA (The Jakarta Post/ANN): The government has confirmed that officials were “still talking” with automaker Tesla Inc amid reports that the American company has expressed an interest in building a battery factory in Indonesia, which has been vocal about its strong ambition to become an electric vehicle (EV) powerhouse.

High-ranking officials announced in late February that the government and state-owned enterprises (SOE) had started plans for a factory that could be used to either power EVs or energy storage systems (ESS), a complementary technology to solar photovoltaics and wind turbines.

“We are still talking with Tesla. I cannot give any additional details [but] I want to clarify that we have never spoken to them about an EV factory, ” Coordinating Investment and Maritime Affairs Ministry investment and mining deputy Septian Hario Seto said at a discussion hosted by KataData on Monday (March 8).

Indonesian stakeholders have reportedly signed a non-disclosure agreement (NDA) as part of the talks.

Several local media outlets have incorrectly suggested that Tesla wanted to build an EV factory in Indonesia. Septian himself told reporters on Feb 4 that Tesla representatives had submitted a proposal for a battery factory to his office, further fanning the rumours.

Other officials who have hinted about the potential project include Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan, Investment Coordinating Board (BKPM) head Bahlil Lahadalia and SOE Minister Erick Thohir.

However, no definitive plans have been announced and Tesla did not respond to The Jakarta Post’s requests for comment.

According to three analysts, the automaker has good reason to want to build a factory in Indonesia, the world’s top nickel ore producer, to cut costs on raw materials. Should the rumours be true, Tesla would join a list of EV industry players, including South Korea’s LG Chem and China’s Contemporary Amperex Technology (CATL), that are mulling over plans to tap Indonesia’s vast nickel deposits and build a nickel-rich-battery factory in the country.

Southeast Asia’s largest economy banned exports of raw metal in January 2020. The International Energy Agency (IEA) expects global battery demand to grow nearly nine-fold from 170 gigawatt hours (GWh) in 2019 to 1,500 GWh in 2030, driven by soaring demand for EVs and making nickel-rich Indonesia a strategic location for a battery factory.

LG Chem and CATL plan to build a battery factory in cooperation with state-owned mining holding company MIND ID and its nickel and gold mining subsidiary PT Aneka Tambang (Antam).

The South Korean firm signed a memorandum of understanding (MoU) for the US$9.8 billion project in December 2020.

“With the EV market in rebound since the fourth quarter of 2020, we saw battery cell prices rise with raw material prices up and battery supply tight. Companies such as Tesla, CATL and LG Chem have mulled over plans to build factories close to the source of raw materials and cut supply costs, ” senior analyst Le Xu of consultancy Wood Mackenzie said in an email on Thursday.

He added that Indonesia was not only rich in nickel but also in cobalt and copper as other key metals needed to produce EV batteries.

At the same time, Tesla CEO Elon Musk said during a Battery Day event last year that the automaker would produce its own batteries and use nickel-rich lithium-ion batteries as opposed to, for instance, cobalt-rich variants.

“So, securing nickel supply with a fair price would be essential for [Tesla] to lower its battery cost and compete in the market, ” said Wood Mackenzie research associate Shijie Liu.

Tesla’s competitors in the global EV market include China’s BYD and BAIC, South Korea’s Hyundai and Germany’s BMW and Volkswagen. Notably, Musk tweeted on Feb 25 that nickel supplies were “our biggest concern for scaling lithium-ion cell production. That’s why we are shifting standard range cars to an iron cathode. Plenty of iron (and lithium)!"

Nevertheless, experts agree that nickel-rich batteries would continue to dominate EV battery demand over the next decade, even as lithium iron phosphate (LFP) batteries eat into the market share.

Septian added: “We don’t think we need to worry about LFP development. In fact, it can complement nickel.”

Market research firm Fitch Solutions wrote in a Feb 5 analysis that such nickel-rich batteries were popular for EVs due to their relatively efficient electricity storage capacity with minimal use of cobalt, a metal that is becoming difficult to secure due to ethical challenges in the metal’s main source country: the Democratic Republic of Congo.

Fitch also wrote that Indonesia’s high-quality nickel reserves and supportive policies were attractive for investors.

“We believe the investment proposal by Tesla will cement Indonesia’s status as a strong player and integral component in the global electric vehicle [EV] supply chain, ” wrote the firm. - The Jakarta Post/Asia News Network

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3

Indonesia , EV , battery , Tesla , plant , talks


Next In Aseanplus News

Asean News Headlines as at 9pm on Saturday (June 19)
Singapore Sports Hub reopening most of its venues on Monday (June 21) as Covid-19 rules are relaxed; 21 cases on Saturday
Indonesia to get Pfizer/BioNTech COVID-19 vaccine from August as country confirms 12, 906 new cases as total nears 2 million mark
Thailand logs 3,000-above cases for third straight day as death toll keeps climbing
Philippines: Overseas Filipinos to get vaccine preferred by destination country; country's Covid-19 total now above 1.35 million
Vietnam: Every citizen to have QR Code by 2025 in an effort to develop digital Government
UN, partners raise US$3.7bil for Covid-19 relief in 2020
UN assembly condemns Myanmar coup, calls for arms embargo
Tokyo cancels public viewing sites, some to be vaccination centres
Philippine central bank sees wider current account surpluses on economic recovery

Stories You'll Enjoy