JAKARTA (TheInsiderStories) – Indonesia will soon have the first integrated electric vehicle (EV) battery cell industrial center, after the South Korean firm, LG Energy Solution Ltd., signed the collaboration with a consortium of state-owned enterprises (SOEs) on Wednesday (12/30). The multi-years project is estimating need an investment costs of US$9.8 billion.
The investment cooperation is the result of a follow-up meeting between President Joko Widodo and President Moon Jae In in Busan on November 2019. According to minister of SOEs, Erick Thohir, the SOEs consortium consisting of PT Indonesia Asahan Aluminum (MIND ID), PT Aneka Tambang Tbk (IDX: ANTM), PT Pertamina, and PT Perusahaan Listrik Negara.
He ensured that this investment runs from the production side and also has domestic and foreign markets. He revealed, some of the projects will be located in the Integrated Industrial Zone Batang in Central Java, which President Widodo reviewed at the end of last June.
This 4,300 hectares industrial estate is a pilot for the cooperation between the government and the SOEs in providing competitive price, connectivity and labor. The plan, he said, is that some of the batteries produced from this project will be supplied to the first electric car factory in Indonesia which already exists and will soon start the production stage.
“Indonesia will move up from a producer and exporter of raw materials to become an important player in the world supply chain for the electric vehicle battery industry,” adds by chairman of the Investment Coordinating Board, Bahlil Lahadalia, in a virtual conference.
Earlier, CEO of MIND ID, Orias Petrus Moedak, said the new holding company will be directed to cooperate with the two potential partners from China and South Korea. Beside, both companies, now senior minister for maritime and investment, Luhut B. Panjaitan approached an American EV and clean energy firm,Tesla (NASDAQ: TSLA).
As reported, the company lead by Elon Musk, is interested in establishing a new battery factory in the country. To note, the manufacturer is trying to get more nickel supplies to support the production of electric cars. Currently, the company buying the battery supplies from Panasonic and CATL and is trying to have its own battery producer.
By the new lithium battery factory, Indonesia is expected to slash more import for the sake of decreasing the current account deficit. Provided that the facility does break ground, Tesla’ lithium battery raw material factory in Indonesia will reportedly be aiming for completion in around three years.
“Maybe (if it is completed) in the next three years. My batteries in the next three years would have become better, maybe faster. I think it must be the biggest because we are all, and our costs are cheaper because of the costs,” he said.
Similar factories, he said, are being negotiated to be built in Karawang, Purwakarta and Bekasi, West Java. The investment can bring the product closer to other South Korean firm, Hyundai Motor Corp.
The minister revealed, the government welcome the arrival of the massive battery companies, including the Silicon Valley-based electric car maker in Indonesia. This is in line with the plan of the industry ministry to bring an investment in the automotive sector around Rp100 trillion ($7.09 billion). This target is planned to be achieved in the next five years.
According to him, a number of new investors have been interested in entering the field of supporting components of EV, such as batteries. However, the details of the investment have not been conveyed because they are still in the process of discussion with related parties.
Currently, there are two large factories that are ready to invest in electric vehicles in Indonesia, namely Hyundai and Toyota. The total investment reaches Rp50 trillion for the next five years. For Toyota, the investment value reached $2 billion for the next four years.
Indonesian government have announced a reduction in fuel consumption and carbon dioxide (CO2) emissions and have launched an EV implementation of 15 – 100 percent of the total circulating vehicles in the country. Its estimated that by 2040 there will be 49 million units of EV or about 50 percent of the total world automotive demand.
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