JAKARTA (TheInsiderStories) – United States’ electric vehicle maker Tesla Inc. (NASDAQ: TSLA) is looking to build a lithium battery raw material factory in Indonesian Morowali Industrial Park (IMIP) area, located in the Central Sulawesi province. The details are still being finalized, Maritime Affairs Coordinating Minister Luhut Binsar Pandjaitan told media in Jakarta’ Presidential Palace on Tuesday (07/23).

Last year, the industrial park has collected $5 billion investment. The area owns 2 million tons capacity nickel pig iron production and 3.5 million tons of stainless steel. Export value of this production reached $3.5 billion in 2018.

By the new lithium battery factory, Indonesia is expected to slash more import for the sake of decreasing the current account deficit. Pandjaitan considered the action important to make Indonesia more independent.

Pandjaitan explained that Tesla is amongst several companies looking to build battery manufacturing facilities in Indonesia. CATL (Contemporary Amperex Technology), the largest battery manufacturer for electric vehicles in China, is apparently in the most advanced stages of the project, but LG and Tesla are also involved, the minister said.

“CATL is the one that entered Morowali, then it and LG were the major players. Tesla also joined it, but how much, I did not know. I do not know about Tesla’s role, as their consortium is the one regulating it,” Pandjaitan said.

Provided that the facility does break ground, Tesla’s 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 adds.

Previously Pandjaitan said that his working visit to China in early July 2019 led to a commitment of lithium battery investment in Morowali with an investment of $4 billion.

The minister stated that the laying of the first stone of the lithium battery factory had been carried out in Morowali with incoming foreign investment of $1 billion. The production of the battery factory, he said, can be exported abroad because of the abundant raw materials of nickel and cobalt in Indonesia.

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 the Hyundai electric car factory.

“But we are negotiating that we cannot make the lithium battery industry in the Karawang area, Bekasi, Purwakarta. Because the Hyundai car will be made in that area so that it will be faster,” he said.

He adds the government is already preparing to welcome the arrival of the massive battery companies, including the Silicon Valley-based electric car maker. Pandjaitan, for his part, claimed that a Presidential Regulation for Electric Vehicles would soon be signed by Indonesian President Joko Widodo. The regulation will enact significant tax incentives for businesses related to electric vehicles and a reduction in import duties.

“It was completed. The president may sign the presidential decree in the next few days,” he said.

This is in line with the plan of the Minister of Industry Airlangga Hartarto who targets investment in the automotive sector to reach Rp100 trillion. 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 electric vehicles, 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.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com