Govt studies EV incentives to support nickel-based battery industry

The government is studying incentives for electric vehicles powered by nickel manganese cobalt (NMC) batteries as it seeks to strengthen its domestic nickel-based battery industry amid the growing popularity of lithium iron phosphate (LFP) technology, Energy Minister Bahlil Lahadalia said on Monday.

Bahlil said the government was preparing a policy package to encourage wider adoption of NMC batteries, although he did not specify the form or timing of the incentives.

"Going forward, we will move in that direction. Don't worry, we already have a formula. It will be part of one of our strategies," Bahlil told reporters.

Indonesia, the world's largest producer of nickel, has invested heavily in building an integrated electric vehicle battery supply chain, hoping to add value to its abundant nickel reserves by attracting investments in refining, battery materials and cell manufacturing.

The government has continued to back nickel-based batteries despite the rapid global expansion of LFP batteries, which are generally cheaper to produce and are increasingly used in mass-market electric vehicles.

Bahlil said LFP batteries were more suitable for shorter-range vehicles, while NMC batteries retained advantages for longer-distance driving.

"People should not simply say that LFP is cheaper. Of course it is cheaper because it is designed for shorter-range applications. High-performance products are rarely inexpensive," he said.

"I want Indonesia to have a complete electric vehicle battery ecosystem."

Separately, Bahlil said the electric vehicle battery cell plant developed by PT Contemporary Amperex Technology Indonesia Battery (CATIB), a joint venture between state-owned Indonesia Battery Corporation (IBC) and a consortium led by China's Contemporary Amperex Technology Co. Ltd. (CATL), was ready to begin operations and was awaiting inauguration by President Prabowo Subianto.

"The plant is ready to be inaugurated. We are just waiting for the appropriate time in the President's schedule," he said.

The Karawang, West Java, plant has an initial production capacity of 6.9 gigawatt-hours (GWh) per year and forms part of Indonesia's efforts to establish a fully integrated battery supply chain spanning nickel mining, processing, battery materials and battery cell manufacturing.

Bahlil said the CATIB facility would become Indonesia's second EV battery plant after an earlier battery manufacturing project developed with South Korea's LG Energy Solution, underscoring the country's downstream industrialization strategy.

Editing by Reiner Simanjuntak