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Indonesia Preparing New Electric Vehicle Policy

February 2019

Indonesia is in the midst of finalizing a new electric vehicle (EV) policy to build its position as a lithium battery hub in the region. The proposed plan offers tax incentives to EV battery producers and automakers and introduces preferential tariff agreements with other countries with high EV demand.

The country is encouraging companies and investors in Japan and Korea to choose Indonesia as their electric vehicle business destination at all levels. It has a target that 20% of cars produced in Indonesia should be electric vehicles by 2025. 

Several companies have expressed interest in developing EV in Indonesia, including Chinese automaker Build Your Dreams Auto (BYD), Hyundai and Mitsubishi Motors. Volkswagen and Renault also have plan to develop local assembly plan, although EVs were not specifically mentioned.

The government’s plan is backed by the fact that Indonesia has plentiful reserves of nickel laterite ore, the main ingredient in the production of lithium-ion batteries. Indonesia is also building a USD 4 billion lithium battery plant on the island in Sulawesi, estimated to be completed within 16 months. The Morowali site has 20 nickel ore processing facilities that feed 1.5 million tonnes of nickel pig iron a year into a three-million tonne-per-year stainless steel mill.

Several vehicle manufacturers, such as Honda, Nissan, Toyota, Mercedes-Benz and BMW are setting up EV, hybrid and battery manufacturing facilities in neighbouring Thailand. 

(Sources: ETEnergy world; Paultan; The Jakarta Post)