Although the Indonesian government has massive goals for EV battery production in the near future (Tangkas, 2019), the presence of infrastructure necessary to achieve such goals is still lacking. However, serious interests have been shown by major industry players. In 2019, CATL, a battery manufacturer from China, backed the development of a $3.2 billion car battery factory in Morowali, Central Sulawesi. PT International Chemical Industry, a national battery manufacturing company most notably known for the ABC battery, has committed $14 million to build a Li-ion battery production facility. They are aiming for a manufacturing quota of 25 million batteries a year starting in 2021 (Parama, 2020). To add to that, the government has formed a team to further expedite the involvement of industry players, consisting of state-owned enterprises such as Mind ID and Antam for raw materials processing, as well as Pertamina and PLN for downstream production ("More investor invests in Indonesia's lithium battery projects," 2020). It is safe to say Indonesia’s journey to becoming a powerful figure in the EV ecosystem might shape up to be a fruitful, yet arduous one.
Indonesia’s pursuit of an industrious EV-based economy is mainly supported by plentiful raw material available within its borders. As established beforehand, nickel is a major component in most commercially available Li-ion battery types, and is projected to be an even bigger component as it is a highly promising cobalt replacement. As of 2019, Indonesia possesses the biggest nickel reserve in the world of about 21 million metric tons. To add to that, Indonesia is also the world’s largest nickel producer with approximately 800,000 metric tons produced in 2019 alone (Statista, 2020). Even so, a major challenge to the establishment of a bustling EV industry is the high initial investment a single facility requires. Furthermore, the lack of standardization presents another dimension of complexity in widespread adoption, raising concerns of market penetration difficulty (Parama, 2020).
Ultimately, the market decides whether or not an investment will make profitable returns. Rising concerns about the environment as of late has driven the market away from internal combustion engine (ICE) vehicles towards EV technology. The same has also been noticed in Indonesia, Hyundai and Softbank, a Japanese technology investment giant, has pledged a combined total of around $4.8 billion for the development of future mobility solutions, including EV industry development ("More investor invests in Indonesia's lithium battery projects," 2020). As sustained demand drives prices down, BNEF predicted a production price drop from $162/kWh in 2017 to $74/kWh in 2030, based on an analysis in a Korean Li-ion battery manufacturing plant (Curry, 2017). Aside from the EV industry, raising demands is also expected in the stationary storage market that supports the renewable energy industry. In a nutshell, exorbitant demands for high performance Li-ion battery is expected to depress production prices. This, combined with exorbitant amounts of nickel available in Indonesia, presents itself as a golden opportunity to beat the market and establish Indonesia’s dynamic EV battery industry that can meet both national as well as international demands.
|Date||:||03 December 2020|