Toyota has plans to start electric vehicle (EV) production in Indonesia, and will be investing US$2 billion (RM8.26 billion) into the project over the next four years, beginning with the development of hybrid vehicles. Indonesia’s coordinating ministry for maritime affairs said the deal was agreed at a meeting in Osaka last Thursday between its minister Luhut Pandjaitan and Toyota president Akio Toyoda, Reuters reports.

In a statement released by the ministry last week, Toyoda was quoted as saying that the automaker considers Indonesia a prime EV investment destination because its government already has an EV development map. “From 2019 to 2023, we will progressively increase our investment to 28.3 trillion rupiah,” Toyoda was reported to have said in the statement.

He added that the company would follow the government’s EV plan by investing in stages, starting with the development of hybrid vehicles. The ministry’s statement however disclosed no details on how Toyota would implement its investment plans.

Indonesia has been making a strong push to attract foreign automakers. Earlier this year, it announced a new EV policy, which will offer tax cuts to EV battery producers/automakers and preferential tariff agreements with other countries that have a high EV demand. Last year, it was reported that Hyundai was planning to invest US$880 million (RM3.63 billion) in the republic and start producing EVs in that market.

Indonesia has plentiful reserves of nickel laterite ore, a vital ingredient in the lithium-ion batteries used to power EVs, and its officials are betting the country can become a major regional player in lithium battery production, which will be much needed to feed the fast-rising demand for EVs.

Analysts are however cautious on how fast the country’s EV ambitions can be carried out, as some of the required nickel smelter technology for its lithium battery projects are complicated.