Hyundai and Toyota Investing in Electric Vehicle Production in Indonesia

July 2019

Toyota Motor Corp will invest USD 2 billion to manufacture Electric Vehicles (EVs) in Indonesia over the next four years, starting with hybrid vehicles to gradually transition to EVs. The company is aiming for EVs to account for half of its global sales by 2025, collaborating with Chinese battery makers contemporary amperex technology (CATL) and EV Maker BYD Co for battery procurement to accommodate the global shift to electric cars.

Indonesia is an attractive destination for Toyota and car companies for several reasons. First, its abundant reserves of nickel laterite ore, a key component in lithium-ion batteries that power EVs. Second, consumers in Indonesia and the region have shown interest in purchasing EVs. Additionally, other car makers have shown interest in Indonesia, which could make supply chain management and Infrastructure more efficient.

Mitsubishi announced in mid-2018 it would partner with the Indonesian government to investigate Infrastructure able to accommodate EVs. Meanwhile Hyundai plans to make Indonesia one of its car export hubs. The company plans to produce electric vehicles with an investment of IDR 40 trillion (USD 2.8 billion) in Indonesia. The company will commence Manufacturing in 2021, aiming for an annual production capacity of 70,000-250,000 cars, which range from sport utility vehicles, multipurpose vehicles, sedans, hatchbacks as well as electric cars. Furthermore, Tesla, Volkswagen and LG Chem have expressed interest in building plants for Manufacturing batteries for electric vehicles in Indonesia.

The Indonesian governments is promoting the development of electric vehicles and lithium battery Manufacturing . The country has ambitious targets to produce 1 million units of cars per year by 2025, nearly tripling current production. Around 20% of the output is supposed to be low-carbon and electric cars. Apart from devising a number of EV operating regulations, 2019 plans include a fiscal scheme for tax deductions to EV battery producers and automakers and  preferential tariff agreements with countries that have a high EV demand. 

 (Sources: Business Insider; Reuters;; the Jakarta Globe)

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