Tesla Said To Build Battery And Electric Vehicle Plant In Indonesia

Indonesia's Investment Minister said the project might begin this year, although an agreement hasn't been signed yet.

By: Dan Mihalascu

May 20, 2022 at 2:29pm ET

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Tesla reportedly agreed to build a battery and electric vehicle plant in Indonesia after CEO Elon Musk met with the southeast Asian country's President Joko Widodo last weekend at the SpaceX launch site in Texas.

Indonesia's Investment Minister Bahlil Lahadalia said on May 19 that the deal is done, without providing too many details. He did hint that the project might begin this year. As reported by BenarNews, the minister said that Tesla agreed to build a battery and electric vehicle plant at an industrial complex in the country's Central Java province.

"God willing, Tesla will enter Indonesia this year. But I can't announce the month yet. Let's wait, because we haven't signed an agreement yet. How much investment is still being kept secret, still waiting. But this is good stuff, big stuff."

Indonesia's Investment Minister Bahlil Lahadalia

While that sounds great, Tesla hasn't officially confirmed the deal, so you should take this with a grain of salt.

After meeting Elon Musk on May 15, Indonesian President Joko Widodo said he discussed "technology and innovation" with the billionaire entrepreneur. In a video released after the meeting, Tesla's CEO said he was "fired up" by Indonesia's enthusiasm, adding that Tesla and SpaceX are "looking closely to a potential collaboration on many, many fronts."

Indonesia has been trying to attract investment from Tesla for a few years now, seeking to take advantage of its position as the world's largest producer of nickel. The metal is a critical element for the cathodes of electric vehicle batteries.

By 2025, the island nation has set a goal for 20% of the cars built domestically to be electric. That's an ambitious target seeing as most of the cars Indonesia currently makes—about 1 million a year—are powered by internal combustion engines.

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The country is trying to grow its EV market, with Hyundai recently starting production of the Ioniq 5 in Indonesia while China's Wuling Motors is expected to make small EVs at its Indonesian plant later this year.

In addition, Hyundai and LG Energy Solution started construction of a $1.1 billion electric vehicle battery plant near the capital city of Jakarta. When finished, the factory is expected to produce enough battery cells to power 150,000 electric vehicles a year. Production is scheduled to start in 2023.