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On the 2nd of April, GAC Aion, EV subsidiary of GAC group, signed a strategic partnership with Indonesia’s Indomobil Group, to establish an EV factory in the country. The announcement marks GAC Aion’s entrance into Southeast Asia’s largest automotive market. GAC Aion is not alone in entering the market with it possibly becoming a new battleground for EV producers to grapple for market share. In addition to this, Chinese battery producer and subsidiary of the world’s largest nickel producer, REPT Battero, has announced plans to build its first overseas factory in Indonesia. This comes as part of a wider trend in which Indonesia is aiming to capitalize on its nickel reserves, looking to onshore the battery value chain and attract EV producers, becoming a global player in the EV market.
An Indonesian factory to complement GAC Aion’s Thai facility
Although the company did not set a timeline for when a facility may be completed, it did say the partnership will coordinate on manufacturing and vehicle sales. The company is reportedly planning to launch two SUVs for the Indonesian market this year, the Aion Y Plus and Hyper HT, as part of its ex China expansion. Further to this, a future Indonesian factory will complement GAC’s EV production facility currently under construction in Thailand, the first phase of which is slated to become operational by July 2024.
Changing dynamics in Southeast Asia’s EV sector
Over the last few years, Thailand has been a focal point for EV production in Southeast Asia especially for Chinese OEMs establishing facilities overseas. Already players such as Great Wall Motors, and Neta have begun producing vehicles there, with BYD and GAC Aion beginning this year, while Changan and Chery have plans to start in 2025.
Indonesia currently lacks EV manufacturing capacity compared to Thailand, with just SAIC and Hyundai-Kia running small scale operational facilities. However, it appears GAC Aion is following other OEMs in having a dual plant strategy in Southeast Asia.
Notably, players such as BYD and Chery both already have plans to establish manufacturing facilities in Indonesia in coming years, strengthening their footholds in the region. Adding to this, VinFast announced it would build a manufacturing facility in the country with a USD1.2 billion investment. Furthermore, Toyota in 2022 committed to invest USD1.8 billion over five years into EV production in the country.
REPT’s first overseas plant
REPT Battero, the battery arm of Tsingshan Holding Group, has plans to establish its first overseas plant in Indonesia. It was reported that operations would start next year, and most likely be strategically situated near by to Tsingshan’s facilities. This proximity offers REPT distinct advantages, including ready access to assistance and resources from Tsingshan.
REPT’s batteries are used in vehicles produced by SAIC, Neta, and Leapmotor to name a few. With these established EV manufacturers operating in the region, the logistics of supplying cells for REPT will become more streamlined and efficient.
Indonesia is looking to capitalize on its nickel reserves and build out its battery value chain
Indonesia has set its sights on an EV battery production capacity of 140GWh annually by 2030, positioning itself as an integral part of the world battery ecosystem. In line with this ambition, the government has reinstated an export ban on nickel ore, compelling refiners to establish operations within the country.
Furthermore, Indonesia is actively bolstering its capabilities in anode material production, lithium refining, and battery material manufacturing, fostering the growth of its domestic battery industry. To support this, the government intends to import 60,000 tonnes of lithium from Australia this year.
In tandem with these efforts, the country is also incentivising EV adoption locally with tax breaks, including the removal of luxury taxes and exemptions from import duties for EVs until 2025. Moreover, starting from 2026, companies will be required to ensure that at least 40% of the components used in EVs sold in Indonesia are locally sourced, further stimulating domestic supply chain development.
Rho’s Evaluation, what does the future hold for the Indonesian EV market
Indonesia’s strategic vision is undeniably an ambitious one, yet it has proven successful in attracting key players in the EV industry. Already, industry giants such as BASF, LG Energy Solutions, Volkswagen, and CATL have either committed to investing in or are actively constructing gigafactories within the country. These significant announcements are further reinforced by the expansion of battery material plants, with Ford and partners recently unveiling plans for a mixed hydroxide precipitate production facility in Indonesia.
Building on its abundant raw materials and strategic geographical location, Indonesia stands as an ideal hub for exporting to markets in Asia Pacific and Europe. Coupled with a relatively low-cost labour force, these factors enhance Indonesia’s competitiveness on the global stage.
As Indonesia’s production capabilities continue to expand and global demand for EVs steadily climbs, the nation is poised to emerge as an important player in the global EV market.
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