Indonesia is the world’s biggest nickel producer and accounts for two-thirds of the world’s nickel ore resources. The country is seeking to build an electric vehicle supply chain domestically.
Battery accounts for 30% to 50% of the electric vehicle costs and nickel makes up roughly 80% of the lithium-ion batteries that power the electric vehicles. The high-nickel ternary positive electrode allows for better battery life and charge cycles. The NCM 811 battery provided by LG GEM for instance is adopted in Tesla’s Model 3.
The Indonesian government had banned the export of nickel ore near the end of 2019 to accelerate downstream suppliers investing locally or directly adopt locally produced nickel ore.
Before electric vehicles became a popular idea, nickel was mostly used in stainless steel which dominated 69% of the nickel ore production, but it is estimated that lithium-ion batteries will take up 31% and leaving stainless steel to only 47% of the ore applications.
Electric vehicle carmakers are aware of the importance of nickel ore to the making of a good battery. Tesla is said to have established a joint venture going into talks with the Indonesian government on investment matters, while also evaluating establishing a factory in the other nickel ore-rich country, Brazil.
SoftBank plans to invest US$500 million in electric vehicles and renewables in Indonesia in the next five years. Chinese BYD also is also partnering with Jakarta public transports in promoting electric buses. Korean Hyundai has announced to invest US$880 million in setting up an electric vehicle production site. Meanwhile, Honda has set up a joint venture with Panasonic to develop battery-swapping options.
In recent years, Indonesia has been attracting foreign investments through local resources and policies, hoping to build an electric vehicle supply chain in the next five years, and making headway in electrifying vehicles in ASEAN.