Tesla and its CEO Elon Musk have been tinkering with entering the Indian industry for a while.
Powerful individuals like Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan & nbsp will visit Tesla’s manufacturing facility in Texas in April 2022 to encourage investment options in Indonesia. The Malaysian government, led by President Joko Widoo, has made attempts.
Musk was interviewed by Anindya Bakrie, CEO of Bakerie and Brothers, on the outside of the 2022 G20 conference in Bali and said he was” optimistic” about Indonesia. Despite these feelings, Tesla hasn’t done much for the nation. & nbsp,
Given that Tesla opened a sales company in Malaysia and will open another store andnbsp in Thailand, this lack of progress definitely stings slightly more. Indonesia may be starting to question whether it is being ignored by Tesla and the rationale behind this choice.
The second factor to take into account is Tesla’s goals in Indonesia and the incentive for working with Tesla there. The market for electric vehicles is not already dominated by Indonesia. The national highway system is still in its infancy, and there aren’t many paying facilities. & nbsp,
Government incentives intended to promote the adoption of electric vehicles have been the subject of intense discussion. In the short term, Indonesia is more likely than electric vehicles to be a larger client of electric scooters, which Tesla does not produce.
Tesla appears to think Malaysia is a more alluring business if the objective is to buy four-wheeled electrical vehicles in Southeast Asia in the near future.
Due to Malaysia’s higher per capita money, more people are likely to have the means to purchase a Tesla. Malaysia even has better road network and has a plan in place to install 10,000 charging stations for electric vehicles by 2025.
Indonesia, on the other hand, wants to contribute to production by producing the batteries and battery packs for Tesla automobiles in addition to being a business for the company. Indonesia seeks to advance its value chain in order to meet and manufacture Tesla vehicles, either for home use or trade.
The Shanghai Gigafactory, Tesla’s local production gateway in Asia, is the main barrier to these strategies. For many years, the firm has sourced its capacitors from Panasonic in Japan. This means that while it is not difficult for Indonesia to join Tesla’s production network, doing so will present a problem because the manufacturer now has well-established supply chains and reliable providers.
Indonesia is never always the most likely member, even if Tesla were planning to establish a manufacturing gateway in Southeast Asia. Thailand continues to lead the region in exporting automobiles, despite Indonesia’s mechanical production sector expanding due to domestic demand. Also if Tesla thought it needed another manufacturing hub in Asia, Indonesia may face fierce Thailand competition for such a venture.
Indonesia is most likely to meet into Tesla’s habitat in the form of batteries. Indonesia has been investing in downstream industries by taking advantage of its control over & nbsp, the world’s largest supplier of nickel. This covers the production of batteries using refined metal and metal smelting. & nbsp,
Chinese battery tycoon CATL has committed to & nbsp, investing billions of dollars in Indonesian battery production along with the state-owned Indonesia Battery Corporation. Tesla has begun obtaining batteries from CATL, opening the door to possible supply chains for Tesla.
However, there are difficulties in this area as well. A clause in the US Inflation Reduction Act of 2022 prohibited energy cars made in Indonesia from being eligible for tax credits and nbsp here.
For the time being, automakers like Tesla face an additional level of uncertainty when integrating Indonesia into their supply chains. The Indian government is looking into ways to get around this, for example through a bilateral deal package.
Additionally, it’s important to note that Tesla isn’t the only or even the biggest sport in existence. Toyota and Hyundai, two South Korean and Japanese automakers, now have sizable manufacturing facilities in Indonesia, as well as decades of experience and ties to the nation’s economy. Automobiles are now made in Indonesia by Chinese companies like Wuling. & nbsp,
These manufacturers are in a prime position to create energy vehicles using batteries and essential minerals made in Indonesia. Since they don’t have to construct features from scratch, they can probably level up more quickly than Tesla.
It would be unexpected if Tesla and Indonesia not conduct business together. However, the nature of this relationship is probably going to go beyond Indian people purchasing Tesla cars. These vehicles are likely to be produced in Indonesia as well, with the use of batteries, Indian nickel, and nbsp being the most likely entry point.
James Guild is an alternative brother at Nanyang Technological University in Singapore’s S Rajaratnam School of International Studies.
This post, which was originally published by the East Asia Forum, has been republished with a Creative Commons license.