Indonesia Investment Authority (INA), Contemporary Amperex Technology Co., Limited (CATL) and CMB International Capital Corporation Limited (CMBI) have signed a Memorandum of Understanding (MoU) to carry out investment, fund establishment and other cooperation in electric vehicle supply chain for US$ 2 billion.
“We have agreed to invest US$ 2 billion, most of it will be in Indonesia, for the electric vehicle production supply chain,” INA CEO Ridha Wirakusuma said during the B20 Summit on November 14, 2022, in Nusa Dua, Bali.
The B20 Forum, which preceded the G20 Leaders Summit, is a prominent engagement group which provides a forum for dialogue among global business community members. It has 1,000 delegations, both from G20 members and non-members. The majority of them are executives of multinational corporations.
EV supply chain opportunity
Wirakusuma revealed that there were three reasons why bussinesmen should start to invest in electric vehicle supply chain:
- The reduction of CO2 emission drives a huge rapid pace of electric vehicle adoption as well as market penetration.
- Electric vehicles have come a long way and will continue to become more advance and cost efficient. Wirakusuma cited an example that in two years electric vehicles are expected to be in cost parity with conventional cars. The most significant drive of the cost efficiency is the battery production cost, which is CATL’s expertise. The price of battery has fallen by almost 90% in over 10 years.
- Global market of electric vehicle has grown rapidly in just 3 years. The number of EVs on the road has tripled. In 2021, there were more than 16 million EVs on the road globally.
“In 4 years, more than 50% of all vehicles sold will be electric vehicles. It is undeniably that an end-to-end value chain for EV is huge. Between 2030 and 2035, all cars are expected to be 100% electric,” Wirakusuma explained.
He said that the opportunity for EV industry in Indonesia was huge. In 2020, there were approximately 136 millions of motorized vehicles in Indonesia, and 85% of them were motorcycles.
The government has set a target to support vertical integration in the EV supply chain in 2030. The production target will be 2.5 million of electric motorcycles and 600,000 electric cars. And from 2040 onwards, only electric motorcycles will be allowed to be sold.
Opportunity in nickel industry
Indonesia has been famous for its abundant nickel resources. The world’s largest nickel producer produced 800,000 tons of nickel in 2019, up from 606,000 tons in 2018.
Nickel is critical ingridients in lithium ion battery cells used in most electric vehicles. In the next decade, Indonesia may become the largest supplier of refined nickel, more than half of the world’s nickel refined output.
“I had a chance to speak with the chairman of CATL. He said that although nickel was extremely important ingredients, the nickel price is actually within the level of cost efficient. If nickel price continues to grow up, it is not gonna be the material of choice,” Wirakusuma said.
In addition, Indonesia’s motorcycle market has represented a huge opportunity by 2025. The projection is that there would be 2.1 million electric motorcyle sales and 400,000 electric cars sales.
“The total plan investment in Indonesia’s EV value chain is over US$ 70 billion in 2023 and only to be growing from there,” he explained.
