In June, a Swiss mining consortium, consisting of Glencore, British EVision and Belgian Umicore announced plans to invest a total of USD 8.9 trillion in Indonesia for EV battery production. BASF and Eramet announced plans to invest $2.6 billion, while Volkswagen (VW) in partnership with Vale Indonesia and China's Zhejiang Huayou said they plan to invest to $196 billion over five years in new production facilities. Korea’s LG and Hyundai have initiated a $8.9 billion investment plan, China’s CATL is bringing in $5.2 billion and Australia's Nickel Industries is raising $471 million for nickel projects. Coordinating Minister of Maritime and Investment Affairs, Luhut Pandjaitan, stated that Indonesia has received a total of $1.3 billion EV investment commitment.
US investment in Indonesia’s EV ecosystem has faced stiff competition. In May, China’s BYD, outbid Tesla to Supply EVs to Indonesian Taxi Operators. While Ford has announced plans to invest in EV-related mineral processing in Indonesia, a proposed partnership with VW has been halted because the 2022 Inflation Reduction Act (IRA) only offers EV tax breaks if the minerals and batteries are produced in the US or in a free trade partner nation. The IRA, combined with the US 30% local content requirements (which will be increased annually), has led some American and Korean investors to consider pivoting from Indonesia. The White House’s efforts to strengthen critical mineral supply chains globally are facing the challenges of implementing its “Made in America” agenda and the reality of limited supplies of critical minerals in North America.
Indonesia as the world’s biggest nickel producer with an established manufacturing sector is actively seeking partnership with the US. This is being explored under the Indo-Pacific Economic Framework. With abundant natural resources, President Jokowi is seeking to ensure that the EV development plans are sustained beyond his term. EV has been anchored to the National Industrial Masterplan 2015-2035 and the new Economic Development 2025-2045. Minister Luhut Pandjaitan expressed that by 2027 Indonesia will be one of the world’s top producers of EVs and EV batteries.
