Indonesia charging ahead with electric vehicle ambitions

Indonesia said Hyundai is keen on expanding its electric car production base to the country as it wants to take advantage of the recently built integrated industrial estate in nickel-rich Central Sulawesi.
Indonesia said Hyundai is keen on expanding its electric car production base to the country as it wants to take advantage of the recently built integrated industrial estate in nickel-rich Central Sulawesi.PHOTO: REUTERS

Indonesia has decided to open up the country to investment for the manufacture of electric vehicles, and at least two major carmakers are said to have shown interest.

Officials from Hyundai are to arrive at the end of this month to discuss plans for a green vehicle project, and Industry Minister Airlangga Hartarto yesterday said Volkwagen was also keen.

Mr Airlangga was speaking to reporters after a ministerial meeting chaired by President Joko Widodo decided fiscal incentives should be given to encourage the sales of electric cars and to develop a domestic industry for such vehicles.

"It's an open regime. The President has agreed," said Mr Airlangga. Both fully electric vehicles, also called battery electric vehicles, and hybrid electric vehicles - that do not require charging stations as they are powered by a conventional internal combustion engine - would be eligible.

"Next, the Finance Minister will hold consultations with Parliament and then we are ready to go," Mr Airlangga said.

Earlier, a source told The Straits Times that a debate was raging among ministers on whether Indonesia should adopt the fully electric vehicle regime from the outset, or start first with the hybrid one.

Maritime Affairs Coordinating Minister Luhut Pandjaitan told a media briefing yesterday, before the ministerial meeting, that Indonesia planned to start with electric motorcycles - possibly as early as this year. The scheme would then be expanded to public buses before private cars were included. He did not give a time frame.

 

BRIGHT SPARK

The construction will take 16 months. By the middle of next year, we will have a plant that can supply the main raw materials to make lithium batteries.

'' MR LUHUT PANDJAITAN, Maritime Affairs Coordinating Minister, on a $948 million joint venture to develop a nickel-cobalt project in Indonesia.

Indonesia, which is South-east Asia's largest economy, registers annual car sales of about one million units, and Mr Airlangga said the aim was to have electric vehicles form at least 20 per cent of total domestic vehicle sales by 2025. He said this would translate to about 400,000 cars and two million motorcycles.

The government has thrown its weight behind green vehicles in an effort to reduce the country's reliance on imports of fossil fuels and turn, instead, to tapping its abundant nickel reserves, a key material for making lithium-ion batteries.

Last week, Mr Luhut witnessed the ground-breaking of a US$700 million (S$948 million) joint venture to develop a nickel-cobalt project in Indonesia.

The partners include Indonesia's Morowali Industrial Park, the Chinese battery recycling company GEM, and Japan's Hanwa, which trades in steel, metals and alloys.

"The construction will take 16 months. By the middle of next year, we will have a plant that can supply the main raw materials to make lithium batteries," Mr Luhut said.

Tesla, the American carmaker which has sold about 143,000 electric cars, relies predominantly on nickel in the form of nickel sulphide as the important cathode component in its car batteries.

Nickel makes up 80 per cent of Tesla's Model S car battery components. Cobalt makes up 15 per cent and aluminium the rest.

Hyundai Motor is keen on expanding its electric car production base to Indonesia as it wants to take advantage of the recently built integrated industrial estate in Morowali, in nickel-rich Central Sulawesi province, said Mr Luhut.

"Hyundai is very eager and sees Indonesia as a good place for one of their production bases," he said. Referring to the strategic Indonesia-Australia Comprehensive Economic Partnership Agreement, he said Indonesia's southern neighbour could be an export market.

A version of this article appeared in the print edition of The Straits Times on January 15, 2019, with the headline 'Indonesia charging ahead with electric vehicle ambitions'. Print Edition | Subscribe