Indonesia Aims to Become EV Hub with Southeast Asia’s First Battery Plant

Indonesia has opened Southeast Asia’s first electric vehicle (EV) battery plant, positioning itself as a potential EV production hub. Established through a $1.1 billion joint venture between Hyundai and LG, the factory in Karawang, West Java, is a key part of Indonesia’s EV ambitions, fueled by the country’s vast nickel reserves.

In July, then-president Joko Widodo highlighted this investment as a pivotal step for Indonesia to become a significant player in the global EV market. To attract more automakers, the government has introduced incentives, such as luxury tax exemptions and tariff-free EV imports for companies committed to local production. Sales of battery-powered cars have surged, with over 23,000 units sold between January and August of this year.

While Indonesia holds the largest nickel reserves globally, the country still relies on imports for processed nickel from South Korea and China due to limited refining capabilities. Environmentalists have raised concerns about the environmental impact of nickel mining, which contributes to deforestation, and analysts have noted competition from lithium iron phosphate (LFP) batteries.

Still, industry leaders are optimistic about Indonesia’s EV future. Hong Woo-pyoung, head of PT HLI Green Power, expressed confidence in Indonesia’s growing role in the EV market, which could see local raw materials fueling battery production in the coming years.