Indonesia’s President Joko Widodo (popularly known as Jokowi) traveled to meet Tesla’s Elon Musk following the US-ASEAN summit in Washington on May 12. Jokowi arrived at Musk’s SpaceX complex near Brownsville, Texas to discuss potential investment from Tesla into Indonesia. Although nothing has been officially signed and no further details were announced, Musk demonstrated interest in Indonesia’s nickel resources and mentioned interest in building a factory for batteries and electric cars.
Indonesia and Tesla indicated interest in each other as investments for the electric vehicle (EV) industry. There have been previous meetings between Tesla and an Indonesian government team led by Indonesia’s chief maritime affairs and investment minister Luhut Panjaitan in 2020 and 2021. Rumors arose in 2020 of Tesla being in talks with Indonesia about building a new nickel venture. This eventually shifted into conversations about building a full battery factory after Musk pleaded with Indonesia’s mining companies to increase their nickel production.
Nickel is the main material used in the production of cathodes for battery cells used in electric cars, and so Musk has mentioned that Tesla is interested in cooperating with Indonesia in many ways because the country has great potential and large nickel reserves. Musk’s interest in Indonesia’s nickel also aligns with Jokowi’s ambition to develop a nickel-based EV industry in the country to produce battery components and to assemble electric vehicles.
Jokowi’s push to develop an EV industry also comes at a time when global automakers are struggling to secure supplies for battery materials and to reduce their dependence on China. If Tesla builds a factor in Indonesia, it will join South Korea’s LG Energy Solution Ltd as another investor in the country. A consortium headed by LG announced it would invest $9 billion in Indonesia as part of a deal to include everything from nickel refining to battery cell production. Additionally, China-based Contemporary Amperex Technology, LG’s larger rival and Tesla supplier, also announced a $9 billion investment in Indonesia in April 2022.
Talks between Indonesia and Musk have yet to actualize an official agreement, but they demonstrate increasing foreign company interest in Indonesia and the country’s ambitions to develop an advanced industry. This potential investment in Indonesia and its appeal is unsurprising as more than 750 US companies have operations in Indonesia including Chevron, MSD, and AIG. Furthermore, Indonesia had a projected increase of 63% in urbanization growth and a 5% increase in GDP in 2021, making it one of the highest growing economies in ASEAN (Association of Southeast Asian Nations). Indonesia also makes up $1.1 trillion of the $3.2 trillion combined GDP of ASEAN which is the third-largest economy in the Indo-Pacific and the fifth largest in the world. As Indonesia tries to attract more foreign investment into its new industry ventures and as companies like Tesla begin gravitating towards the country, economic growth for Indonesia and ASEAN may soar to new heights.
Mimi MacKilligan is a participant in the Young Professionals Program at the East-West Center in Washington. She is a first-year graduate student at the George Washington University studying International Affairs with a double concentration in International Security Studies and Asia.