INDONESIA REPORT
Investment related to EVs is gaining momentum in Indonesia. While the government is aiming to upgrade the industry by mainly using nickel as a battery material, Hyundai Motor of South Korea and Hon Hai Precision Industry of Taiwan have announced their plans to produce EVs and automotive batteries. If the concentration of industries advances, the country will compete with Thailand, which is also making efforts to attract related industries, for the leading role in EV production in Southeast Asia.
At the Indonesia International Auto Show, which started in the suburbs of Jakarta on Dec 11, Hyundai Motor’s compact EV “Kona” attracted much attention. The company will begin production in 2022 at its plant in West Java province, which will soon be operational.
Chinese companies are also developing their aggressive stance. Wuling Motors, which operates under the FAW brand, announced that it will launch the GSEV, a compact EV, in 2022. MG, a subsidiary of SAIC Motor Group, also exhibited an EV.
The reason why the companies are so aggressive about local production is because the Indonesian government is eager to establish an EV industry. The amount of investment that the government considers necessary for the consolidation of the EV industry is $35 billion. In order to attract investment, the government has banned the export of unprocessed nickel and has introduced a 10-year corporate income tax exemption for companies that invest more than 5 trillion rupiah in EV-related projects.
Source: The Nikkei
PSR Analysis: Major EV-related investments in Indonesia are as follows.
(1) South Korea: Hyundai Motor’s $1.55 billion for complete vehicle plant
(2) Taiwan: Hon Hai is considering building a complete EV plant
(3) China: CATL is considering building a $5 billion battery plant
(4) Germany: BASF plans to invest in a nickel refinery / VW considers investment to batteries
(5) United States: Tesla Considering Battery-Related Investments
Indonesia is a market with attractive potential due to its large domestic demand, its large working population, and its abundance of resources as a concentration point for the automobile industry in Southeast Asia comparable to Thailand.
Compared to this trend, the Japanese companies, which currently have a very high market share, are not making any significant moves. There is a point to be made that the spread of EVs in Southeast Asia, where dependence on coal-fired power generation is high, could lead to an increase in carbon dioxide emissions. In essence, however, Japanese manufacturers may lack the resources and passion to take on these overseas markets.
Of course, in order to maintain and expand their presence in a region that has been so highly regarded, they need to take an aggressive stance and have a well-thought-out strategy, but they have been enjoying a stable market share for a long time and have become accustomed to peace, so to speak.
It seems that they do not want to compete simply on the basis of the size of their investment, but the question is how Japanese manufacturers will deal with Southeast Asia in the future, and whether it is right to be immersed in research when the power structure could be drastically changed. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
