Indonesia – Localised Battery Production Will Cut EV Prices By 30%

Indonesia’s Minister of Industry, Agus Gumiwang Kartasasmita has announced Indonesia's ambitious plan to significantly reduce the prices of electric vehicles (EVs) by up to 30 percent according to Antaranews.

Addressing the issue of costly EV batteries, which can account for 40-50 percent of an EV's total price, Agus proposed domestic battery production as a solution. This solution is somewhat justified as Indonesia boasts one of the largest nickel deposits in the world.

Aside from local usage, Indonesia’s large nickel supply has also attracted several foreign entities to invest in EV batteries production, with Australia initially announcing that it has entered into a joint venture with the republic. This deal, coined as a "win-win" EV battery deal from both parties, will see Australia trade its lithium supplies for Indonesia’s nickel, both of which are key materials in EV battery production.

By manufacturing EV batteries locally, Indonesia aims to directly cut down the prices of these EVs. Agus further emphasised that besides lowering EV prices, domestically-produced batteries would also increase the domestic component level (TKDN) of EVs.

This move is expected to not only attract more investments but also boost the country's competitiveness in the global market. Last December, a representative of the Coordinating Ministry for Maritime Affairs and Investment, announced that four Chinese EV makers have indicated that they are prepared to begin production in Indonesia amongst which were Wuling and BYD.

Furthermore, Agus has also highlighted the interest of other international automotive players like Renault and VinFast to invest in battery production facilities in Indonesia. He further underscored the need for the EV brands to establish factories in the country just to meet the local market demands and enhance its position in the RHD global EV industry.

Indonesia had also set ambitious targets for the domestic automotive industry, aiming to produce about nine million electric motorbikes and 600,000 electric vehicles and buses.

This ambitious target reflects Indonesia's commitment to embracing sustainable transportation solutions while fostering economic growth and attracting foreign investment.