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Tesla now Locked on Seeking New EV Manufacturing Hub in Indonesia
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2022-05-27
From India to Indonesia, Elon Musk is scouting for sites to make more Teslas. With the world mired in supply chain chaos, access to materials matters most. He’s got it right. After lobbying against India’s tight manufacturing policies and prohibitive import duties, Musk is headed to meet Indonesia’s President Joko Widodo and visit parts of the country, which is also the top producer of nickel, a key metal for batteries. That’s an astute bet—for Tesla and Indonesia. And a missed opportunity for New Delhi. To meet ambitious electric vehicle (EV) targets, Indonesia has drawn in several battery and car makers in recent months with a variety of incentives.
With a friendly policy bolstering the country’s EV goals, companies have started committing billions of dollars. LG Energy Solution, along with others, is investing about $9 billion in a full supply chain in the country. With Hyundai, the firm is developing a battery plant, too. Meanwhile, the world’s top powerpack maker Contemporary Amperex is investing almost $6 billion in a battery project with state-backed Aneka Tambang and Industri Baterai Indonesia. Further up the value chain, China’s Zhejiang Huayou Cobalt and Vale Indonesia announced they would work together on a nickel project.
The move by companies across the EV supply chain into Southeast Asia’s largest economy shows how important it is to be close to a source of raw materials. Tesla knows this well. It has created large manufacturing hubs in China and Germany. Now the EV-maker is looking to secure materials and make its own batteries. Wherever Musk sees problems in production, he looks for a solution. Tesla is essentially creating discrete supply chains across the globe.
Just as China made Tesla a global company, Indonesia could do the same for its battery supply chain. All while making manufacturing more affordable and eventually, EVs, too. It’s a means to an end—and a smart one at that.
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