As the world's largest holder of nickel resources (over 40% of reserves) and Southeast Asia's largest economy, Indonesia is using new energy as the core engine to move its economy from resource exports to manufacturing and services.
Recently CATL, LG Group, Huayou Cobalt and other global players have accelerated investment, and with local policy incentives and deeper international cooperation, Indonesia is building a complete supply chain from nickel mining and material processing to battery manufacturing and end use.
Through its priority list policy Indonesia offers foreign investors three benefits:
1. Tax incentives: new energy projects investing more than USD 35 million receive a ten-year corporate income tax exemption, LBM's 120,000-tonne LFP phase two project is a typical beneficiary, greatly easing early financial pressure.
2. Easier foreign access: the 2024 revision of the Investment Law allows 100% foreign ownership in key fields such as battery manufacturing, giving CATL, REPT and other Chinese companies more flexible investment options and speeding up capacity.
3. Green energy requirements: industrial parks must source 20% of power from renewables, prompting companies to build their own clean energy, Tsingshan, for example, is building a 1 GW solar plant at the Weda Bay industrial park, meeting the policy and lowering its own power cost.
The government also plans to build a "super grid" by 2030 connecting the islands to solve the uneven distribution of clean energy.
Automakers: BYD is investing USD 1 billion in a 150,000-vehicle-a-year plant in Subang, West Java; Geely's Purwakarta plant has capacity of 20,000 vehicles a year with production expected in Q3 2025; GAC Aion is building EV assembly and battery plants; Citroën is planning capacity and is on the tax incentive list; SAIC Maxus has committed IDR 15.4 trillion; and Volkswagen has decided to build a plant.
Battery makers: CATL is seeking a USD 1 billion loan for its battery plant in Karawang, West Java, a joint venture with four Indonesian state-owned companies with total investment of about RMB 8.4 billion and planned capacity of 15 GWh from 2027. LG Group is investing a further USD 1.7 billion in HLI Green Power, its joint venture with Hyundai, raising capacity to 20 GWh after phase two (from 2025), mainly for Hyundai's Ioniq models. REPT started an 8 GWh battery plant in early 2025 in Tsingshan's IWIP park, drawing on Tsingshan's 1 million tonnes of high-grade nickel matte capacity (40% of the global total), raising energy storage cell cycle life to 12,000 cycles at 16% below the industry average cost, targeting Southeast Asian storage and exports to Europe and North America.
Materials: Huayou Cobalt plans to take over projects LGES has exited with supply-chain partners, drawing on its 180,000 tonnes of nickel metal capacity at IWIP (fully operational in 2025) to build a chain from nickel mining to precursors and battery recycling. LBM is building the world's largest overseas LFP base in Semarang (total capacity 120,000 tonnes); its first 30,000-tonne line started in 2024 and made its first export in January 2025, a breakthrough for Chinese LFP technology going abroad. The 90,000-tonne phase two received USD 200 million from Indonesia's sovereign wealth fund and will meet 50% of Southeast Asia's LFP cathode demand when complete. CNGR and others are also planning LFP supply chains.
INFOR also attaches great importance to the Indonesian market. As a builder of intelligent high-end production lines for new energy materials, we have established strategic cooperation with several local companies and set up our own office to serve customers locally and respond as quickly as possible.
Indonesia's NEV industry still faces obstacles. Infrastructure lags, with low coverage of charging and battery-swap stations, which slows adoption, and shortages of technical talent and gaps in the supply chain also hold the industry back.
But challenges come with opportunities. Indonesia and industry are investing more in infrastructure and encouraging companies to build charging and swap stations, working with universities and research institutes to train talent, while companies strengthen innovation, improve product quality and build out the supply chain.
With abundant resources, favourable policies and a large market, Indonesia's NEV industry is growing fast. Despite the challenges, it is set to become an indispensable part of the global new energy vehicle landscape.