Indonesia Has Grand Plans To Become a Global EV Hub
Southeast Asia is emerging as a global manufacturing hub for electric vehicles, with top automakers looking to diversify supply chains and reduce reliance on China. Indonesia is among the countries taking advantage of this opportunity, launching multiple initiatives that can help position it as one of the next major EV hubs of the world.
The most recent of which is the banning of bauxite exports starting June of this year. The move would reportedly encourage domestic processing of the material used as the main ore of aluminium, a key component in EV technology. That would then advance President Joko Widodo's plan to develop the country as a major EV ecosystem, which would open up new streams of revenue and generate jobs for citizens.
“The government will remain consistent in implementing downstreaming, so the value-add can be enjoyed domestically for the country’s development and people’s welfare,” he said in December.
In November, an Indonesian official also said the country is building a lithium refinery and an anode material production facility to complement its nickel-based battery materials industry and support the country’s EV ambitions, according to Reuters. Indonesia halted exports of raw nickel in January 2020, which attracted foreign investors to build local smelters. The lithium hydroxide plant would support a capacity of up to 60,000 tonnes, while the anode material plant would support up to 80,000 tonnes. Both materials are important components of EV batteries.
The motorists who would be buying the EVs are, of course, also part of Indonesia’s plan and ecosystem. Since 2019, the government has been providing tax cuts for the sales of electric cars and hybrid vehicles. And in 2022, it announced that it would subsidise sales of electric cars and motorbikes starting in 2023 to further accelerate adoption in the country.
Motorists could claim subsidies of up to 6.5 million rupiah (US$413) for every purchase of an electric motorbike. The scheme for electric cars, meanwhile, has yet to be finalised.
The country is targeting to have 1.2 million electric bike adoptions and 35,000 electric car adoptions by 2024.
At this point, it’s too early to tell whether President Widodo’s bet on EV would eventually pay off. However, he firmly believes that investors will come as long as the country is able to develop an ecosystem.
“The investors will come in as in the future of the automotive industry, electric motorcycles and cars will replace maybe more than 50% of the existing market demand,” he said. “This is what we have to seize.”
President Joko Widodo wants to develop Indonesia as a major EV ecosystem, launching multiple initiatives over the past couple of years that would help realise this grand plan.
The most recent of which is the banning of bauxite exports starting June of this year – a move that would encourage domestic processing of the material used as the main ore of aluminium, a key component in EV technology.
The country is also building a lithium refinery and an anode material production facility to complement its nickel-based battery materials industry.