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Indonesia’s Nickel Reserve may be Tesla’s Haven

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Reports are further emerging that Tesla is planning to build a battery production facility in Indonesia. Senior government officials are confirming that they are in talks with Tesla about a potential investment in the Southeast Asian country. 

Tesla will reportedly invest in the Central Java province, in the city of Batang, located 365 kms east of Jakarta.

Tesla’s Potential Investment in Indonesia

Rumblings about a potential move by Tesla into the Indonesian market are not something new. Last month, Minister for Maritime Affairs and Investment, General Luhut Binsar Pandjaitan, first relayed the news. In a statement to local media outlets, General Pandjaitan said Tesla is interested in building a lithium battery factory in Indonesia. 

On October 5, senior official Ayodhia Kalake stated to Reuters that Tesla initiated contacts about a possible investment. Mr. Kalake, however, also mentioned that further details must  be addressed by both parties.

Minister of Industry Agus Gumiwang Kartasasmita also affirmed today that discussions are underway between the Indonesian government and Tesla. Kartasasmita reported that talks have been initiated over a potential battery factory in Batang.

Why is it a win-win for both parties?

Tesla potentially investing in Indonesia is a guaranteed winning venture. The country has the perfect ecosystem when it comes to developing an EV industry. For starters, Indonesia has the largest reserves of nickel in the world with 21 million metric tons. As a raw material, nickel is vital for the production of lithium-ion batteries that power electric vehicles. 

Jakarta is keen to develop a local supply chain for nickel, and create conditions to build EVs in the country. Last July, Central Java Governor Ganjar Pranowo announced plans to develop a 4,000 hectare industrial estate in Batang. The government has stopped exports of unprocessed nickel ore to support investments in domestic industries.

Tesla is also seeking to produce battery packs in-house. On Battery Day, the company unveiled its 4680 battery cell. The cell increases energy density by five times, ranges by 16 percent, and improves power output by six times. 

To grow the volume of battery production, the automaker needs to up its supply of nickel. Two weeks ago, reports emerged that Tesla is in talks with Brazilian mining Vale SA for a potential nickel deal. 

Tesla is employing a two-pronged approach: in-house battery production and achieving vertical integration, and relying on third-party suppliers to increase the volume. For all intents and purposes, the strategy is working!

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