Tesla has shown interest in entering the Indonesian market, but has not made significant progress. Indonesia wants to collaborate with Tesla in battery production, but faces challenges due to Tesla’s existing partnerships and competition from other automakers.
There are also complications regarding tax credits for electric vehicles using Indonesian nickel. Despite these obstacles, it is likely that Indonesia and Tesla will eventually do business together, potentially involving the use of Indonesian nickel and batteries.
Flirting with the Indonesian Market
Tesla and its CEO Elon Musk have expressed interest in entering the Indonesian market for several years. Indonesian government officials, including Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan, have made efforts to promote investment opportunities in the country. However, despite the Indonesian government’s overtures, Tesla has yet to make a significant move in Indonesia. This lack of progress raises questions about why Indonesia may be getting passed over by Tesla.
Malaysia: A More Attractive Market?
While Indonesia has shown interest in collaborating with Tesla in terms of production and assembly, Tesla appears to view Malaysia as a more attractive market for selling electric vehicles in Southeast Asia. Malaysia has a higher per capita income, a better road infrastructure, and a plan in place to set up thousands of electric vehicle charging stations. These factors make Malaysia a more favorable market for Tesla’s four-wheeled electric vehicles compared to Indonesia.
Indonesia’s Potential in Battery Manufacturing
While Indonesia may not be the most likely candidate for a Tesla production hub in Southeast Asia, it can potentially play a role in batteries. Indonesia has significant control over global nickel supplies and has been investing in downstream industries, such as nickel smelting and battery manufacturing. Chinese battery giant CATL, along with the state-owned Indonesia Battery Corporation, has committed to investing billions of dollars in Indonesian battery production. This presents an opportunity for Indonesia to integrate into Tesla’s supply chains through its battery manufacturing capabilities.
Competition and Challenges
Despite Indonesia’s potential in battery manufacturing and its desire to be involved in Tesla’s ecosystem, there are challenges and competition to consider. Tesla already has a regional production hub in Shanghai and established supply chains with long-standing suppliers. Moreover, other automakers like Toyota, Hyundai, and Chinese firms already have manufacturing footprints in Indonesia and can produce electric vehicles using critical minerals and batteries from the country. These factors create complexities and potential hurdles for Indonesia to become a key player in Tesla’s operations.