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View all search resultsNMC-over-LFP mandate could rattle EV investors
Some experts suggested developing NMC upstream and midstream capabilities while fostering LFP-related investment in module and pack assembly.
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A visitor stands next to a module of an electric vehicle (EV) during the last year's Gaikindo Indonesia International Auto Show on July 28, 2024, in Tangerang, Banten. The event showcased the latest cars from 55 global automotive brands. Indonesia’s ambition to develop as an EV hub is strongly backed up by the country’s abundance in natural resources, particularly nickel, a critical resource for EV batteries. (AFP/Bay Ismoyo)
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eeking to capitalize on its abundant nickel supply, the government is eyeing new “regulatory tweaks” and incentives to nudge electric vehicle (EV) makers away from lithium iron phosphate (LFP) batteries toward nickel-manganese-cobalt (NMC) ones.
However, analysts caution that forcing a pivot away from the market trend toward LFP batteries could spook foreign investors and stall growth in Indonesia’s manufacturing sector. Instead, they urge a dual-chemistry approach that would keep Indonesia nimble in the fast-shifting world of battery technology.
The plan was revealed by Deputy State-Owned Enterprises (SOEs) Minister Kartika Wirjoatmodjo, who stressed the potential of the country’s nickel reserves.
“Slowly, we are pushing for regulations that will require EV factories in Indonesia to shift from lithium [-based batteries] to nickel-based ones,” he said on Aug. 5 during the International Battery Summit in Jakarta. “We also want support from other ministries to provide incentives for this shift.”
Nurul Ichwan, investment promotion undersecretary at the Investment and Downstream Ministry, also said the government would prioritize incentives for EV makers using NMC batteries.
He acknowledged that most EV manufacturers, who currently enjoy duty-free imports in exchange for building local factories later, are using LFP batteries. However, they may also be pushed to produce NMC batteries instead, citing concerns over LFP recyclability and hazardous waste risks.
According to him, LFP-based cars can switch to NMC without major design changes, as both rely on the same electrical systems.
