Tesla’s Indonesia factory plans cancelled, proposal wasn’t for EV batteries – car plant in India next?

Remember Tesla and Indonesia courting each other last year? Turns out that both parties will not be entering into a long-term relationship. Reasons? He’s not giving her what she wants, what he has she doesn’t want.

Our ASEAN neighbour is rich in the raw materials needed for EV batteries. In fact, Indonesia is the world’s biggest producer of nickel, a crucial ingredient in the batteries which in turn is the most important part of an EV. Top battery producers like China’s CATL and South Korea’s LG Chem have already set up shop in the country.

“We have nickel, cobalt, the key materials to make lithium batteries, and bauxite that could be processed into aluminium and, in turn, be used to make electric vehicle frames, as well as copper that is also needed by batteries and wiring systems in electric vehicles,” Indonesia president Joko Widodo said at the launch of the locally-assembled Hyundai Ioniq 5 this month, touting the country’s resources.

Tesla’s Indonesia factory plans cancelled, proposal wasn’t for EV batteries – car plant in India next?

However, negotiations with Tesla failed over the terms related to the supply of raw material to make power generators, among other things. Think giant powerbanks.

The Indonesian government and Tesla have not commented, but according to Nicke Widyawati, president director of Indonesian state oil company Pertamina, Tesla was keen on setting up a plant to manufacture Energy Storage Systems (ESS), portable equipment that can store many megawatts of electricity to be deployed in remote areas. Not EV batteries or cars.

Cars might be what Tesla is thinking of for its possible next outpost – India. Many states in the country are wooing Tesla investment and there have been documents from the southern Indian state of Karnataka saying that Tesla will be opening an EV manufacturing facility in the state. In January 2021, Elon Musk’s carmaker incorporated Tesla Motors India and Energy Private Limited with its registered office in the city of Bengaluru in Karnataka.

That was all last year though, and we’ve yet to hear anything official from Tesla or Musk about an “Indian Gigafactory”. India is also not the most straightforward investment destination and red tape is a known problem. Outside of the US, Tesla has a plant in China and is currently building one in Germany.