Indonesia, South East Asia’s largest economy and car market, is taking giant strides towards emerging as an EV powerhouse.
In 2019, Indonesian President Joko Widodo promulgated a Presidential Regulation (55/2019) that mandated the development of a domestic EV industry as a national priority. The Regulation sets out several policy guidelines to encourage acceleration of EV industry development in the country, including giving the government powers to limit the use of internal combustion engine (ICE) cars to precipitate transition to e-mobility.
Nature already favors Indonesia. According to a report by the US Geological Survey, the nation has the world’s largest proven nickel ore reserves, estimated to be 21 million tons. nickel, a relatively rarely found element which is also a critical element for EV batteries.
As the demand for EVs and consequently nickel gathered pace, in 2014 the Indonesian government banned the export of unprocessed ore. While this ban was briefly relaxed in 2017, it was reimposed in 2020. Today, any global companies who want to access Indonesian nickel are required to set up processing plants in the country. Three such plants went into trial production in 2021 and many more are in the pipeline.
To further move up the value chain, the Indonesian government is mulling the imposition of tariffs on the export of nickel products having less than 70% nickel content. According to some analysts, this move is aimed at forcing companies that produce mixed hydroxide precipitate (MHP), an intermediate product precursor to cathode active material.
The Indonesian government has set up Indonesia Battery Corporation (IBC) to develop the downstream EV ecosystem. The idea is for IBC to maximize Indonesian natural resources potential through downstream manufacturing and boost the country’s competitiveness in EV battery production by acting as proxy for international companies who wish to invest in Indonesian EV battery sector.
The strategy has already started showing results. Car maker Hyundai and EV battery giant LG Energy Solutions (LGES) have started work on Indonesia’s first EV plant, which is expected to start production by 2024. LGES, according to the government, is building a 10GWh cell production facility worth USD 9.8 billion and the construction is slated to be completed in first half of 2023.
Contemporary Amperex Technology Co., Limited (CATL), the Chinese battery giant, has announced an investment of USD 5 billion in EV battery plants in the country. There have been reports of the Indonesian government being in talks with global EV car leader Tesla. Several Japanese car makers like Toyota, Honda, Mitsubishi and Suzuki have also shown interest in setting up EV factories in the country and starts to develop prototypes for new EV model in the future.
If these and other plans fructify, the country would well be on its way to meet the ambitious target set by the government – the production of 140 GWh of EV batteries by 2030. To put the figure in context, it is approximately the entire global EV battery production capacity in 2020.
Indonesian government also seeks to ensure that there will be 13 million electric motorcycles and 2.2 million electric cars on the roads by 2030. The government believes that if this target can be achieved, by 2030 the country will be able to reduce its Greenhouse Gases (GHG) emission by 41%, far more than its commitment of a 29% reduction.
One of the essential pillars of the success of Indonesia’s EV policy will be the focus on product safety and quality. Given the country’s position as the second leader in automobile manufacturer (only behind Thailand) in South East Asia, such quality and testing ecosystem already exists in the conventional internal combustion engine (ICE) powered vehicles space and it will have to start building something similar in the EV space.
As a global EV testing and certification leader, TÜV SÜD is keen to play its part by partnering with government bodies and manufacturers to accelerate electromobility transition in Indonesia.
Our global network of state-of-the-art laboratories has accumulated decade-long of experience in performing wide range of battery testing parameters, covering key battery safety and performance test such as shock vibration, environmental simulation, salt-spray, IP dust/water resistance, and performance life cycle testing. Our holistic approach coupled with interdisciplinary expertise and reputation as the independent and impartial technical service provider, has supported automobile companies and EV battery makers around the globe in ensuring product safety and accelerating access into the market.