EV Batteries and Indonesia: The Fierce Competition Among Automakers for Battery Materials

Why Is Indonesia Gaining Global Attention?

Indonesia is emerging as a key player in the global electric vehicle (EV) battery supply chain. With a population nearing 300 million, it is the fourth-largest country by population and boasts a vast territory of over 17,000 islands, ranking 14th in the world by land area. Located in Southeast Asia, Indonesia has positioned itself as a rising economic powerhouse within the ASEAN region.

For decades, South Korea has been strengthening ties with Indonesia through its New Southern Policy, initially focusing on timber resources from Borneo. However, today, Indonesia is gaining attention as a crucial hub for EV battery materials and a growing market for electric vehicle sales.

Tesla’s Push for Battery Materials and Indonesia’s Strategic Importance

Tesla, the world’s most valuable automaker, is aggressively securing battery materials to maintain its dominance in EV production. The company’s 2021 Impact Report revealed its supply chain partners for lithium, nickel, and cobalt—12 key suppliers worldwide.

Elon Musk has repeatedly emphasized the need for more investment in mineral processing, particularly for EV battery materials. As of now, lithium-ion batteries remain the dominant technology, with no immediate breakthrough alternatives in sight.

To ensure a stable supply, Tesla sources raw materials from major global suppliers, including:

• Albemarle (USA)
• Livent (Argentina)
• Ganfeng & Yahua (China)

Tesla currently procures lithium, cobalt, and nickel from four suppliers each, ensuring a diversified and secure supply chain.

The Surge in Battery Material Prices and Tesla’s Response

In 2022, battery material prices skyrocketed, leading Tesla to prioritize in-house production and refining. During Tesla’s August 2022 shareholder meeting, Musk stated that securing production capacity was more critical than just having access to mineral reserves.

"The Earth is essentially a massive chunk of minerals. The real issue isn't the availability of resources—it’s whether we have the facilities and capacity to refine and produce them at scale." – Elon Musk

To tackle this, Tesla submitted a proposal to the Texas state government to establish a refining and processing plant near its Austin headquarters. This signals Tesla’s intent to vertically integrate battery material production rather than rely entirely on external suppliers.

Indonesia’s Role in Tesla’s Expansion Plans

Recognizing Indonesia’s vast reserves of nickel and other battery materials, Elon Musk met with Indonesian President Joko Widodo (Jokowi) at SpaceX headquarters in May 2022 to discuss potential Tesla investments.

While Indonesia also sought investment in SpaceX’s satellite and space launch projects, the core focus was on Tesla’s battery supply chain. Given Asia’s rapidly growing EV market—led by China and Southeast Asia—Indonesia presents a strategic opportunity for Tesla.

If Tesla can establish an integrated production hub in Indonesia—covering battery material sourcing, processing, EV production, and sales—it would be a game-changer.

Indonesia and India were already seen as top contenders for Tesla’s next Gigafactory in Asia following the Shanghai plant:

• India is a prime candidate for Model 2 (expected small EV) production, targeting the affordable EV segment.
• Indonesia is attractive for its rich battery resources and growing domestic EV market.

South Korea and Japan Enter the Competition for Indonesia’s EV Market

South Korea and Japan have also intensified their competition for dominance in Indonesia’s EV industry, creating a three-way battle between the U.S., South Korea, and Japan.

Japan’s Longstanding Influence in Southeast Asia

For decades, Japan has been deeply involved in Southeast Asian development through large-scale ODA (Official Development Assistance) investments. Japan has treated Southeast Asia as a key geopolitical and economic region, much like how the U.S. views Latin America.

Japanese automakers, particularly Toyota, have long been the dominant force in the region. Small vehicles remain the most popular segment in Southeast Asia, and Toyota’s competitive pricing, quality, and market saturation have made it the top brand.

South Korea’s Bold Move: LG and Hyundai’s Aggressive Expansion

South Korea has rapidly expanded its presence in Indonesia’s EV sector, with major investments led by LG Energy Solution (LGES) and Hyundai Motor Group.

1. LG’s $11 Billion Consortium for Nickel and Battery Production

A powerful consortium comprising LG Chem, LGES, LG International, LX International, and POSCO Holdings—alongside Chinese battery giants CATL and Huayou—has launched an $11 billion investment to secure nickel supplies and build battery production facilities in Indonesia.

LG’s vision is to not only extract raw materials but also establish a full-fledged EV battery production ecosystem—from mining to battery manufacturing and even EV production.

2. Hyundai’s Challenge to Toyota’s Market Dominance

Despite Toyota’s 70% market share in Jakarta, Hyundai is boldly expanding in Indonesia:

• In 2019, Hyundai began constructing its first ASEAN car assembly plant near Jakarta.
• In March 2022, Hyundai officially launched Ioniq 5 production in Indonesia—marking its commitment to the Southeast Asian EV market.
• Hyundai, LGES, and Hyundai Mobis jointly established HLI Green Power, a battery joint venture in Indonesia.

Japan’s Response: Toyota and Mitsubishi’s Countermeasures

Japan has doubled down on its efforts to maintain control over Indonesia’s EV market:

• Mitsubishi announced an additional $900 million investment in EV production.
• Toyota pledged a $2.4 billion investment over the next five years to accelerate EV manufacturing in Indonesia.

China’s Entry into the Race

China is also actively expanding in Indonesia, mirroring its approach in ASEAN trade and infrastructure investments:

• Chery Automobile (Cherry Motor) is preparing a $1.3 billion investment in Indonesia.
• Shanghai-GM-Wuling (SGMW) is setting up EV production facilities in the country.

A Geopolitical and Economic Battlefield: The “Four-Kingdom Competition”

Indonesia has become a battleground for the U.S., China, Japan, and South Korea, each vying for dominance in the future EV and battery market.

The rivalry mirrors other regional economic and trade battles:

• ADB vs. AIIB: Japan’s Asian Development Bank (ADB) vs. China’s Asian Infrastructure Investment Bank (AIIB)
• TTP vs. RCEP: Japan’s Trans-Pacific Partnership (TTP) vs. China’s Regional Comprehensive Economic Partnership (RCEP)

While Japan and China compete for influence in ASEAN, the U.S. and South Korea are expanding their presence through EV and battery investments.

Conclusion: Indonesia’s Role in the Future EV Market

Indonesia is no longer just a resource-rich nation—it is emerging as a key player in the global EV and battery supply chain.

As the battle between Tesla, Hyundai, Toyota, and Chinese automakers intensifies, the outcome will shape the future of Southeast Asia’s EV market. With South Korea now ranked among the world’s top 10 economies, its aggressive approach in Indonesia marks a pivotal moment in its global expansion strategy.

🚗 Who will emerge as the dominant force in Indonesia’s EV future? The competition has only just begun.