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Indonesia luring Volkswagen to set up EV battery component manufacturing in the nickel-rich country

Indonesia has been very active in efforts to win electric vehicle (EV) investment. Construction of Hyundai and LG’s EV battery plant in Karawang, West Java started last month, and there are ongoing talks with Tesla on batteries and energy storage solutions. Next target: Volkswagen.

Minister of investment and head of the Indonesian Investment Coordinating Board (BKPM) Bahlil Lahadalia revealed that he is persuading VW to set up production of EV battery components in Indonesia, and that he made the proposal during a working visit to Germany this month. In that trip, Bahlil met with Thomas Schmall-von Westerholt, member of the board of management at Volkswagen AG and CEO of Volkswagen Group Components.

“I’m trying to convince VW to make cathode precursors for electric vehicle batteries in Indonesia, as part of the supply chain of raw materials for their battery factories and electric vehicles around the world,” Bahlil said in an Instagram post, picked up by Autonetmagz.

Construction of the Hyundai-LG EV battery plant in West Java started last month, production to start in 2024

He added that the Indonesian government has committed to developing an EV ecosystem, and BKPM will facilitate the provision of raw materials through collaboration with local companies.

“In 2030, 70% of cars in Europe will be electric, and China is targeting 60% by 2027-2028, so almost the entire world will be switching from fossil fuel to batteries. Indonesia has 25% of the world’s total nickel reserve, so we have nature on our side – 80% of the raw materials for batteries such as cobalt, manganese and nickel are available in Indonesia,” Bahlil pointed out.

There won’t be much updates on the proposed Tesla investment though, as Bahlil said that Indonesia has a non-disclosure agreement with Elon Musk’s company. However, there won’t be an electric car factory. “We’ve never talked about a car factory. They have six businesses – Starlink, launching pad, hypersonic, lithium battery pack and energy stabiliser – that’s what we are talking about,” he said in February.

Indonesia, the world’s biggest nickel producer, is also in talks with Elon Musk’s Tesla

Indonesia is the world’s biggest producer of nickel, a crucial ingredient in EV batteries. It used to be the world’s top exporter, but the country stopped selling the raw material last year; instead, it plans to develop a full nickel supply chain itself.

“It’s very important because we have a great plan to make Indonesia the biggest producer of lithium batteries and we have the biggest nickel (reserves),” RI president Joko Widodo said in November 2020.

If you’re wondering what’s Malaysia’s progress when it comes to EVs, the recently revealed 12th Malaysian Plan (RMK-12) contained low carbon mobility objectives and a green mobility agenda. Initiatives to strengthen the local EV industry and green technology ecosystem are reportedly set to be announced in the upcoming Budget 2022. The government is looking at incentives for both EV makers and buyers. Click on the links to read more.

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