Southeast Asia’s first electric vehicle battery plant starts operations in Indonesia

Indonesia has inaugurated Southeast Asia’s first electric vehicle battery plant, located in West Java province. The plant will have an estimated annual capacity of 10 gigawatt hours (GWh) of battery cells, enough to power 150,000 electric vehicles.

The plant, the result of a $1 billion investment by a consortium of Hyundai Motor Group, LG Energy Solution and Indonesia Battery Corporation, highlights the collaborative efforts needed to successfully complete such transformational projects. The battery plant will also be integrated into Hyundai’s auto plant, which will produce 50,000 units per year of the Kona electric vehicle.

The consortium plans to increase the plant’s capacity to 20 GWh with investments of $2 billion.

Indonesia’s strategic ambitions for electric vehicle batteries

For Indonesia, the development of this electric vehicle factory is part of the country’s strategy to become one of the world’s top three producers of electric vehicle batteries by 2027. In addition, Indonesia aims to have a capacity of 140 GWh per year by 2030, which will represent between 4 and 9% of global demand.

The goal of reaching an annual capacity of 140 GWh is a testament to the country’s forward-thinking strategy and determination to play a crucial role in the future of electric mobility.

Indonesia’s nickel reserves

Indonesia holds the world’s largest nickel reserves, estimated at 21 million tonnes, or 22% of global reserves. Although 70% of total nickel consumption is for the stainless steel sector, demand for the manufacture of batteries for electric vehicles is increasing.

According to data from S&P Global Market Intelligence, Indonesia will produce 40% of the world’s nickel in 2023.

The country banned the export of nickel ore in 2014 and introduced a requirement for producers to purify raw nickel in Indonesia before export.

Building a Complete Supply Chain for Electric Vehicles

Global electric vehicle manufacturers, including China’s BYD and Wuling, have invested in Indonesia and their electric vehicles are already on the market. In addition, the country is also developing lithium refineries and anode material production facilities to complement its nickel-based battery industry. Historically, Indonesian nickel smelters are equipped to produce grade 2 nickel (ferronickel/pig iron) while battery cathode production requires grade 1 nickel containing at least 99.8% nickel. However, Indonesia does not have rich lithium deposits. Australia supplies about half of the world’s lithium and can export this ore to Indonesia. Most of Australia’s lithium exports currently go to China.