Indonesia Taps CATL for $6B EV Battery Boost

Indonesia’s $6 billion EV battery investment with CATL marks a turning point in its downstreaming strategy, shifting from raw nickel export to domestic lithium-ion battery manufacturing.

With some of the world’s largest nickel reserves, Indonesia aims to become a key global EV battery hub, aligning with President Prabowo’s energy independence goals. Although the country ranks second in ASEAN motor vehicle production, its battery industry has lagged, focused on lead-acid technologies. This CATL-backed project changes that—establishing capacity for up to 300,000 EV batteries annually, a vast leap from Indonesia’s 2022 EV sales of just 7,600 units. Generous policy incentives—including tax holidays and R&D deductions—have drawn major players like LG Energy Solution and BYD, further positioning Indonesia as Southeast Asia’s battery manufacturing hub.

Key Highlights

Indonesia partners with CATL for a $6B EV battery project, leveraging vast nickel reserves.
The project supports 300,000 vehicles/year, accelerating domestic EV ecosystem growth.
Policy incentives attract global players, but environmental and geopolitical risks persist.

The shift from raw material export to value-added manufacturing could reduce battery costs by 10–15%, create thousands of jobs, and better integrate Indonesia into the EV global supply chain. It also aligns with the nation’s broader renewable energy plan of deploying 115 GW solar by 2060, demanding local energy storage solutions.

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Challenges remain. Past industrial growth has yielded minimal job creation and raised environmental concerns. Heavy dependence on Chinese investment also introduces strategic risks. Long-term success hinges on diversifying partnerships, improving governance, and developing sustainable, competitive manufacturing models.