What Indonesia’s Strategic Supply Chain Evolution in the Global EV Industry Means for Your Business
Indonesia’s rapid advancement in the electric vehicle (EV) industry is marked by significant developments in its battery production capabilities and collaborations with global automotive giants. Understanding the significance of Indonesia’s evolving supply chain in the electric vehicle (EV) industry for your business is crucial. Below are three examples illustrating its impact beyond just the automotive sector.
Hyundai Indonesia, in collaboration with Hyundai Mobis, is kickstarting Southeast Asia’s first EV battery factory in the GIIC area, Cikarang, West Java. This factory, named Hyundai Energy Indonesia, is set to commence operations in 2024, with an investment of $60 million. It aims to boost battery production, potentially increasing capacity from 20,000 to 70,000 units, catering to a wide market across Asia and beyond. The new plant will use battery cells supplied by HLI Green Power, turn them into modules that include a controller and a heat controller. It will then supply the modules to global automakers.
Simultaneously, Indonesia’s first EV battery cell plant in Karawang, a venture by Hyundai Motor and LG Energy Solutions, is expanding its capacity to a notable 30 GWh/yr from the initial 10 GWh/yr. When fully operational, the facility is expected to produce a total of 10 GWh worth of NCMA lithium-ion battery cells every year, enough for more than 150,000 BEVs. Battery cells produced will be used in Hyundai Motor’s IONIQ 5 and IONIQ 6, and Kia’s EV models, helping Hyundai and Kia produce vehicles with high efficiency, performance and safety by supplying optimised battery cells. Additionally, a consortium comprising Volkswagen, mining company Vale, Ford, and China’s Zhejiang Huayou Cobalt, a known battery mineral producer, is also involved. This move positions Indonesia as a leader in the EV ecosystem, challenging even a $9 billion investment plan by a European consortium. President Joko Widodo emphasizes this development as a step towards integrating Indonesia into the global EV supply chain.
Jakarta, Indonesia – September 9, 2023: A series of black Hyundai IONIQ 5 electric vehicles parked in the Senayan area of Jakarta
In another strategic move, VKTR Teknologi Mobilitas, backed by China’s BYD Automobile, is set to launch Indonesia’s first electric bus and lorry assembly facility in 2024, introducing 3,000 units of electric buses and lorries annually. This development highlights the competition between nickel-based and iron-based (LFP) batteries, with Indonesia’s vast nickel reserves playing a critical role. The country’s involvement in both LFP and NMC battery technologies indicates a diversified approach to EV manufacturing.
Further strengthening its position in the EV sector, Indonesia is negotiating a “Mini” Free Trade Agreement (FTA) with the United States to benefit from U.S. tax credits under the Inflation Reduction Act. This strategic move aims to leverage Indonesia’s large nickel reserves to attract more investment from U.S. EV and battery manufacturers, exporting Indonesian-made EVs to the United States within the next 3 years.
To support the growing EV industry and its supply chain, three examples of industries will follow over the next decade:
🔹 Production and Machinery & Equipment: Substantial investments in additional production technology and tools will be necessary to achieve targeted capacities.
🔹 Metal Industry: The demand for metals, including both highly refined and normal steel, will continue to surge as EV factories drive this demand. This will position Indonesia to compete globally in specialized sectors.
🔹 Consumer Goods and Services: The creation of new industrial jobs will lead to an expansion of the middle class, driving increased consumption of both domestic and imported goods and services, further stimulating economic growth.
At GetAhead, we have assisted clients in entering the Indonesian procurement market and will continue to support our clients’ procurement and sales strategy needs.
