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Tesla in Indonesia? Here’s how entering a new market might impact the automaker

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The Government of Indonesia is reportedly in talks with Tesla about a possible investment in the country. Senior official Ayodhia Kalake affirmed that the Southeast Asian country is in early discussions with the electric automaker. Mr. Kalake stated it was Tesla that informally reached out to the Indonesian government.  

“It was still an early discussion and was not detailed yet,” Ayodhia said on Monday. Ayodhia added that “further discussion with Tesla” is needed. Tesla has yet to comment about its reported contact with the Indonesian government.

Indonesia: A Market Ripe for EV Disruption by Tesla

If the rumours are true and it was Tesla that initiated those talks, Indonesia was not a country chosen randomly. The country is the largest producer of nickel in the world.  Approximately 800,000 tonnes of nickel were produced in the country in 2019, up from about 606,000 tonnes in 2018.

The huge spike in demand for EVs in North America, East Asia, and Europe, is having a knock-on effect on Indonesia. The country is seeing both its economy and its global status boosted by the need for nickel for EV batteries. 

Batteries such as Nickel Cobalt Aluminium (NCA) and Nickel Manganese Cobalt (NMC) use 80% and 33% of nickel respectively. Li-ion batteries, touted as the next-generation battery packs for EVs, mostly rely on nickel.

Where Does Tesla Stand?

Tesla is witnessing a soaring demand for its vehicles. Last Friday, Tesla reported a record number of 139,300 deliveries during Q3.  The company also struck deals with both LG Chem and Panasonic to increase their battery supply. 

Tesla is also planning to ramp up battery production over the next few years, to 3 terawatt/hours a year. To do so, their own battery cell was unveiled during Battery Day last September: the 4680

Having a multi-pronged approach requires a steady supply of components needed for manufacturing EV batteries, such as lithium and nickel.

Regarding Lithium, Tesla secured with Australian mining startup Piedmont Lithium. The latter will supply Tesla with approximately 264,800 tones of lithium over the next five years.  

Regarding nickel, since Indonesia is the world’s largest producer of it, this move makes perfect sense from Tesla’s perspective.

If a deal is struck between both parties, Tesla will be getting ever closer to filling its battery production quotas. 


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