Tesla's plan to build factory in Indonesia falls through

SINGAPORE: Clean energy giant Tesla will not build a factory in Indonesia as negotiations with the government failed over, among other things, the terms related to the supply of raw material to make power generators.

This is according to two Indonesian government officials who spoke separately with The Straits Times, on condition of anonymity.

An e-mail sent to Tesla went unanswered.

Senior Indonesian officials, including Nicke Widyawati, who heads an Indonesian state oil company, had earlier said that Tesla was keen on setting up a plant to manufacture Energy Storage Systems, portable equipment that can store tens of megawatts of electricity to be deployed in remote areas.

In February 2021, the Indonesian government confirmed that it had received a proposal letter from Tesla, adding that it was excited to work with a company with lithium battery technology that is among the world's best.

On Sept 15, a consortium led by South Korea's LG Energy Solution, a subsidiary of LG Chem, broke ground for the construction of a US$1.1 billion (S$1.5 billion) electric vehicle battery plant in Karawang, West Java, that will have an initial capacity of 10 gigawatt-hours and will gradually scale up to 30GWh.

Meanwhile, China's Contemporary Amperex Technology (CATL) has committed to spending about US$5 billion by 2023, and US$15 billion more through 2028 in Indonesia.

A memorandum of understanding between CATL and an Indonesian state company was signed in November 2020.

"CATL's plan is still on, but there is some delay," a government official told The Straits Times on March 24, without elaborating.

CATL is the world's largest producer of lithium-ion batteries, while LG Chem is the third-largest.

Indonesia, which has the world's largest nickel reserves, is eager to develop a full supply chain for the resource, from extracting battery chemicals and making batteries to building electric vehicles.

At the launch of Indonesia's first locally assembled electric vehicle, Hyundai's Ioniq 5, on March 16, President Joko Widodo noted that the country was rich in natural resources.

He said: "We have nickel, cobalt, the key materials to make lithium batteries, and bauxite that could be processed into aluminium and, in turn, be used to make electric vehicle frames, as well as copper that is also needed by batteries and wiring systems in electric vehicles." - The Straits Times