Giga Indonesia?

Indonesian officials say Tesla has agreed to construct a new battery and vehicle plant in Indonesia, shortly after CEO Elon Musk met with President Joko Widodo over the May 14th weekend.

While he admits nothing has been signed yet, Investment Minister Bahlil Lahadalia says Indonesia and Tesla are working on a deal, and hope to have an investment plan by the end of 2022.

“God willing, Tesla will enter Indonesia this year. But I can’t announce the month yet. Let’s wait, because we haven’t signed an agreement yet. How much investment is still being kept secret, still waiting. But this is good stuff, big stuff.” - Bahlil Lahadalia, Investment Minister, Indonesia

While there’s been no official word from Tesla, it’s no secret Musk has been courting Indonesian officials for months now; trying to get in on Indonesia’s massive nickel deposits. Given how ambitious Musk and Tesla have been in pursuit of new nickel sources, it certainly makes sense that they’d be willing to offer a factory for access to Indonesian mines.

And it’s a fairly shrewd move on the part of the Indonesian government as well. Tesla has been looking for a base in South Asia for a while now, with a potential deal stalling out in India to cut through that country’s aggressive 100% duties on imported vehicles. Courting the largest EV company in the world is in-line with the current government’s focus of rebuilding the COVID-damaged economy with green solutions.

Indonesia reportedly has the world’s largest nickel reserves; so with a need to attract business to the country - and sitting on a very valuable metal - it’s a no-brainer move to ban exports of raw nickel, as the Indonesian government did in 2020. This almost ensures that investors and producers like Tesla would have to deal on Indonesian terms.

Regardless it’s best to be sceptical of any deals until we have official announcements from both parties of a deal being signed. So many things can happen at the negotiation table. It might be a guarantee that Tesla will build a battery plant in Indonesia to comply with local laws, but it’s not a given that this will mean a new Gigafactory. 

It is an exciting development, but we’re just going to have to be patient.