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Analysis: RI’s long journey to attract Tesla Gigafactory
Indonesia’s discussion with electric automaker Tesla made headline again last week as Bloomberg reported that the two are closing in on a deal. However, Tesla’s CEO Elon Musk was quick to respond via his recently-acquired Twitter cautioning against citing “unnamed sources” as they are frequently false.
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A worker checks pile of nickel pig iron (NPI) produced in the Morowali industrial park in Bahodopi district, Morowali regency, Central Sulawesi, on Oct. 18. The development of the industrial complex is slated for full completion in 2019, when it is expected to reach the annual capacity of producing 2 million tons of NPI and 3 million tons of stainless-steel slab.
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ndonesia’s discussion with electric automaker Tesla made headline again last week as Bloomberg reported that the two are closing in on a deal. However, Tesla’s CEO Elon Musk was quick to respond via his recently-acquired Twitter cautioning against citing “unnamed sources” as they are frequently false. So where is Indonesia currently in the talks to attract Tesla into building an auto factory in the country?
Home to the biggest nickel reserves in the world, Indonesia has been leveraging its potential to attract investment in battery and electric vehicle (EV) production. It is currently building an end-to-end EV battery production ecosystem, from mining to recycling, and seeking to expand it to an EV manufacturing ecosystem.
In EV battery production, Indonesia has been receiving flocking interests, especially from Chinese companies. Indonesia’s Morowali Industrial Park is home to the lithium-ion battery plant backed by subsidiary of China’s Contemporary Amperex Technology Co. Ltd. (CATL), the world’s biggest EV battery manufacturer, and GEM Co., a supplier to Samsung Electronics, PT Indonesia’s Morowali Industrial Park (IMIP), China’s Tsingshan and Japan’s Hanhwa Co. Ltd, and has made its first shipment of 1,200 tons of nickel metal.
Furthermore, the Morowali Industrial Park is also home to a refining facility run by Zhejiang Huayou Cobalt Co., and the site of CNGR Advanced Material Co.’s future smelting plant. In August 2022, Tesla signed pricing agreements with Huayou and CNGR to supply ternary precursor materials produced in their factories in Indonesia and made from the country’s nickel reserves. Huayou will supply the EV maker from July 1, 2022, to the end of 2025 and CNGR from 2023 to 2025.
Meanwhile, for EV manufacturing, South Korea’s automaker Hyundai had launched its plant in Indonesia in March last year and sold the country's first locally assembled EV in the market throughout 2022. China’s Wuling Motors Holdings has also built assembly facilities in Indonesia and set a record for the most battery EV sold in the country in 2022.
With an established EV battery production ecosystem where Tesla has made deals with and precedents from EV automakers that have built and sold their cars in the country, the discussion to have Tesla build its EV factory in Indonesia has been dragging for a long time, so the issue may not be production ecosystem unreadiness.
Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan said the country is preparing for some incentives to attract giant EV automakers, such as Tesla and China’s BYD. However, he did not mention what has been dragging the deal finalization and the incentives prepared.
