State-owned Indonesia Battery Holding to help build integrated electric vehicle industry in Indonesia, says GlobalData

Following the news that a group of state miners MIND ID and Aneka Tambang (ANTAM), state utility Perusahan Listrik Negara (PLN) and state oil company Pertamina have agreed to form a new venture — Indonesia Battery Holding;

Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:

“The entry of government into battery manufacturing space will send positive signals and can help in attracting more investments from OEMs, battery manufacturers and tech companies. It would also help in a course correction in Indonesia’s move towards its electrification targets. Indonesia has set an ambitious target of 20% of vehicle production as well as vehicle exports to comprise electric and hybrid vehicles by 2025 and increase to more than 25% by 2030.

“However, COVID-19 pandemic has derailed the country’s electrification targets. Across the globe, government budgets and spending have shrunk and the priorities of OEMs have shifted. Moreover, several countries have better proposition in terms of incentives, growth opportunities and existing/planned recharging infrastructure. Even in Southeast Asia, Thailand is clearly ahead of Indonesia in terms of EV production, sales as well as attracting investments. Indonesia has so far failed to stimulate decent local demand, primarily due to high cost of hybrid and electric vehicles.

“Indonesia has abundant raw materials like cobalt, zinc, manganese and nickel ore, which are used in the production of EV batteries. The ban on exports of key unprocessed material and the new EV regulation that stipulates minimum local content levels of 80% by 2029 will promote local battery manufacturing. Indonesia signed deals with leading EV battery makers such as LG Chem Ltd. and Contemporary Amperex Technology Ltd (CATL) to use surplus nickel output for the local production of lithium-ion batteries. With government and new players entering the local battery manufacturing sector, the cost of batteries and vehicles are set to come down and ultimately boost local demand.”

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