Indonesia is becoming a battleground for the batteries used in electric vehicles (EVs) as a major Chinese company and its local partner gear up to build Indonesia’s first electric bus and lorry assembly facility.
The competition is between the longer-range nickel-based battery and the cheaper iron-based battery.
Jakarta-based auto parts and equipment maker VKTR Teknologi Mobilitas, supported by China’s BYD Automobile, the world’s largest EV manufacturer and a main producer of the lithium iron phosphate (LFP) battery, is seeking to churn out 3,000 units of electric buses and lorries a year when the facility is ready in 2024.
Already 52 LFP-based BYD buses have been shuttling the streets of Jakarta.
Meanwhile, hundreds of EVs made by South Korea’s Hyundai, which relies on lithium nickel manganese cobalt (NMC) batteries, and China’s Wuling, which uses LFP batteries, have entered Indonesia’s battleground cities.
The world’s largest EV battery producer, CATL, will later 2023 build a plant in North Maluku to produce raw materials to help make NMC battery cells and packs.
Indonesia is the leader in global nickel reserves, with 24%, followed by the Philippines, which has about 5%, according to Bloomberg. Nickel-based batteries are the most common form currently found in EVs. Nissan, Mercedes-Benz, and Tesla (high-end models) use NMC batteries, which promise a longer driving range.
LFP batteries offer two-thirds lower energy density than the NMC ones. That’s why the LFP batteries would need to be one-third bigger. On the flip side, LFP batteries are about 40% cheaper than NMC batteries.
Despite Indonesia’s wealth of nickel, additional costs may tilt the market towards the more affordable LFP option, according to the Institute for Energy Economics and Financial Analysis.
The Indonesian government expects to see more than US$30 billion (S$40.7 billion) in investments in the EV battery supply chain by 2026.
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