Indonesia’s outgoing president, Joko Widodo, held discussions with the Tesla boss at the World Water Forum in Bali.

Indonesian minister, Luhut Binsar Pandjaitan, revealed that following discussions, Elon Musk would “consider” an offer to construct an EV battery plant in the country. The minister added “We made an offer, is it possible to build an EV battery plant here, precursor cathode…”.

The Southeast Asian country has grand ambitions to become a large EV manufacturing hub which is fully integrated from nickel mine to EV cell production. Through a strict nickel ore export ban, which commenced in early 2014, the country has successfully attracted outside investment (largely Chinese) to add value to its mineral wealth. It now has a fully integrated stainless steel industry and aims to replicate this success in the EV space. Investment has already started with two Indonesian state-owned companies, Antam and Indonesia Battery Corporation (IBC), teaming up with LG Energy Solution (LGES) to develop EV battery production facilities worth US$9.8Bn in Karawang, International City in east Jakarta in 2019.  

Despite Indonesia’s latest discussions, this is not the first time the government has courted Tesla to invest in the country. In August 2023, Tesla seemingly snubbed Indonesia, instead favouring setting up a base in Malaysia. The government dismissed the move at the time, stating that Indonesia intends to target EV factories, while Tesla’s ambitions in Malaysia related to distribution and charging networks.

Tesla does, however, have a commercial track record in the country. In 2022, it struck a US$5Bn deal to buy materials for batteries from nickel processing companies in Indonesia. A year later, Nickel Industries, an Australian nickel producer, which operates in Indonesia, invited Tesla along with a number of other OEMs to invest in upstream nickel facilities.

As we have discussed numerous times, Indonesian nickel does not yet qualify for inflation reduction act (IRA) EV tax credits. In November, US president Joe Biden held bilateral talks at the White House with Indonesian president, Joko Widodo, on a range of topics including the potential agreeing of a trade agreement. Such a trade agreement did not materialise. Despite the lack of a deal, Western OEMs continue to consider Indonesia’s potential and the near-guaranteed source of nickel supply it offers.