The Indonesian investment minister, Bahlil Lahadalia has announced that Volkswagen plans to create an electric vehicle battery ecosystem in Indonesia, and has partnered with miner Vale, Ford, and Chinese battery minerals producer Zhejiang Huayou Cobalt.
According to Reuters, the move comes as automakers are looking to reduce the cost of producing EV batteries, which make up about 40% of a vehicle’s cost, and catch up to EV market leader Tesla.
The announcement was made during the Hannover Messe industry fair in Germany, where an Indonesian delegation led by the President of the Republic of Indonesia, Joko Widodo met with representatives from companies including BASF, Eramet, and Volkswagen.
Minister Bahlil said on Sunday, “Volkswagen, Europe’s biggest automaker, will work with Vale, Ford, Huayou, French miner Eramet and several Indonesian firms such as Merdeka Gold Copper, the parent company of Merdeka Battery, and energy firm Kalla Group.”
According to the report, Volkswagen’s investment in Indonesia will be carried out by its battery unit, PowerCo.
According to Bahlil, BASF has expressed interest in constructing a battery material plant in partnership with Eramet in North Maluku province, for a total investment of about $2.6 billion.
Bahlil claimed that European companies’ investment interest would allay concerns that Indonesia’s mine management “did not adhere to international standards.”
Indonesia’s president, Widodo, stated last month that the country will enhance monitoring of environmental standards for nickel mining, amid worries about the metal’s production’s impact.
Meanwhile, Indonesia has the largest nickel reserves globally and has been striving to create downstream industries for the metal, ultimately intending to manufacture batteries and EVs.
Ford made its first investment in Indonesia in March by collaborating with Vale Indonesia and Huayou in a $4.5 billion nickel processing plant in Southeast Sulawesi.
According to the report, it also announced plans to spend 180 billion euros ($193 billion) over five years in battery production and raw material sourcing, among other areas.
