Tesla to build battery material processing plant in Indonesia, claims official

Tesla is planning to invest in a new battery material factory in Indonesia, with an official announcement due in the next few months, according to Indonesian senior minister Luhut Pandjaitan via a post on Instagram.

The minister said the investment plan was briefed to him personally by Tesla CEO Elon Musk, during a meeting in a recent trip to San Francisco. “He wants to invest in the manufacturing of materials for lithium batteries. The investment will be quite big,” Pandjaitan said in the post.

Indonesia is one of the world’s biggest nickel producers, but since 2020, the country has put a ban on exporting nickel ore, in an attempt to encourage the industry to process it locally.

Pandjaitan notes, however, that the investment will not include a car manufacturing plant, citing overproduction at its factories worldwide. The company currently operates four vehicle manufacturing plant, including the Gigafactory Berlin-Brandenburg in Germany, and Gigafactory Shanghai in China – the latter which will be supplying the Model Y (and Model 3 in the near future) to Malaysia.

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Indonesia has for years been attempting to woo Tesla into investing into the country by leveraging its rich reserves of nickel, which can be processed for use in electric vehicle (EV) lithium-ion batteries. Reports suggest that initial talks began as early as 2020, and Musk have also met with President Jokowi in 2022 for advanced talks with the Indonesian government.

In May 2022, Indonesia’s Investment Minister Bahlil Lahadalia also said that Tesla has “agreed” to “build a battery and electric vehicle plant”. From Pandjaitan’s recent post, however, it appears talks for the latter has broken down.

As reported by Reuters, this development comes after Indonesia’s recent decision to give carmakers two additional years to qualify for EV incentives, as an attempt to attract more investments into the country. Indonesia is racing against Thailand and India to develop an EV industry as an alternative to China, the world’s largest EV producer.

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