What is the investment progress of the battery industry in Indonesia? What is the potential and impact of Indonesia’s battery industry development?
The compound annual growth rate (CAGR) of the battery industry is expected to reach up to 10.5%. Also, the battery market revenue is expected to grow to USD 280 billion by the forecast period of 2021 to 2028. Multiple battery market opportunities are expected to drive market growth. Therefore, the market is expected to grow significantly. Due to the increasing popularity of consumer electronics products on a global scale, lithium-ion batteries are expected to be used as a product type during the forecast period.
High demand for wearable electronics such as smartphones, tablets, LCDs, and fitness bands is also driving market growth. The market is expected to witness significant growth owing to technological advances related to increased efficiency, cost-effectiveness, and product innovation. Batteries are also essential devices mainly used in the automotive industry.
What is the opportunity for the battery industry in Indonesia? What is the impact of Indonesia’s battery industry development? Read this article to know more!
Battery Industry in Indonesia Becoming the First Integrated Electric Battery Producer in Southeast Asia
President Joko Widodo has officially started the development of Southeast Asia’s first electric vehicle battery factory. Through HKML Indonesia, a consortium managed by the collaboration of South Korean companies with PT Industri Baterai Indonesia or Indonesia Battery Corporation (IBC), a subsidiary of the Indonesia mining company, will build and operate its USD 1.1 billion factories in Karawang New Industrial City, West Java.
The Ministry of State-Owned Enterprises has announced the establishment of a battery company called PT Industri Baterai Indonesia or Indonesia Battery Corporation (IBC). The development of the consortium and factory is the government’s goal to build a downstream industry for the country’s mining resources, especially nickel. The era of commodity exports is over and Indonesia must strive to evolve from a commodity-based economy to a strong downstream industry based on the development of technological innovation.
In addition to cooperation with the Hyundai consortium, the formation of this company also involves the KIA Corporation, Hyundai MOBIS, and LG Energy Solution. On the other hand, the Indonesian electric vehicle (EV) battery industry also received an investment of USD 15 billion as a result of cooperation between IBC and Chinese corporations namely Ningbo Contemporary Brunp Lygend Co. Ltd.
LG Energy Solution will also form a joint venture with Antam to build a nickel mine at Halmahera and the signing of the joint venture will take place in September 2022, which will invest approximately USD 300 million in the joint venture. Mine capacity is now estimated at 16 million tons per year. The nickel mining joint venture is part of an electric vehicle (EV) battery ecosystem investment plan.
The investment that can be realized for now is only USD 7.1 billion by building an integrated battery factory in Batang industrial park. The investment in the EV Battery Integration Project Initiative is in line with the EV Battery Development Plan, which emphasizes an integrated ecosystem from upstream to downstream. This initiative is predicted to absorb more than 20,000 workers, specifically for electric car battery factories.
The Correlation of Indonesia Battery Industry Potential with Electric Vehicle Industry and Nickel Industry in Indonesia
Several car companies are working with other manufacturers to develop batteries with improved specifications such as higher charging rates, less risk of battery leakage, and better overall battery quality. The size of the US battery market was estimated at USD 10.49 billion in 2019. Tesla has signed a deal to buy nickel from two companies in Indonesia for USD 5 billion.
Under the agreement, Tesla will source nickel from the Morowali industrial zone in Central Sulawesi. The government said the contract value could increase as it is in the initial investment stage with a five-year contract term. Morowali industrial zone is a nickel-based industrial estate with nickel, stainless iron, and carbon steel as the main products. Morowali nickel is used by Tesla to make lithium batteries. In addition to Tesla, US automaker Ford has also signed a partnership with the government.
In addition, German automaker Volkswagen (VW) is also interested in investing in the Morowali industrial zone. Downstream mining projects are projected could increase the export sales value by up to ten times. The government also plans to process the nickel ore into precursors and cathode materials, and further into lithium-ion batteries.
The government has been promoting this downstream project since six years ago. To this end, the government intends to improve the quality of the local labor force around the Morowali industrial area by establishing a number of polytechnics and vocational schools. Prior to the opening of crude nickel export bans in 2015, only USD 1.1 billion was exported for this raw material.
Companies that Cooperate in Investing in the Battery Industry Development in Indonesia
In addition to Tesla, Ford, and Volkswagen (VW) which of course are already familiar with the market, other large companies that have a high interest in investing in the development of the battery industry in Indonesia include:
Founded in May 1944, Kia Corporation is South Korea’s oldest automobile manufacturer. Kia spends 6% of its annual revenues on its R&D and also operates research centers in the US, Japan, and Germany. Today, Kia produces more than 1.4 million vehicles a year from 14 manufacturing and assembly sites in 8 countries. The company has more than 40,000 employees and annual sales exceeding USD 17 billion.
2. Hyundai MOBIS
Founded in 1944, Hyundai MOBIS is recognized as a global auto parts manufacturer that focuses resources on the future automotive industry featuring autonomous driving, connectivity, and electrification solutions. Its business areas include key auto parts, three major modules (chassis modules, cockpit modules, front-end modules), and after-sales service. They aim to provide differentiated mobility solutions using both software and hardware. The company generated USD 31 billion in sales for 2021 with 10,835 employees worldwide.
3. LG Energy Solution
Founded in 2020 and based in Seoul, South Korea, LG Energy Solutions Ltd develops and produces energy solutions around the world. Besides that, the company also provides solutions for energy storage systems used in power grids, UPS, and commercial and residential applications. It has operations globally in South Korea, China, and the United States. The company generated sales of USD 15.6 billion in 2021 and employs more than 27,000 people globally.
Enter The Indonesian Battery Market with BRIGHT Indonesia
Because of the huge impact of the battery industry in Indonesia, of course, it takes a lot of in-depth research about the battery industry market in Indonesia. So, to enter the Indonesian market, you need the right local partner to assist you.
BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.
BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:
- Provide assistance for you in expanding and developing your business by identification of potential partners.
- Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison.
- Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
- Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.
For more information, email firstname.lastname@example.org