Indonesia’s strategic location and abundant natural resources make it an increasingly important player in the energy and sustainability space with tremendous growth potential, specifically in Asia and throughout the rest of the world. The archipelago nation’s critical equatorial geography means that it has a high potential for solar energy, with Indonesia’s government reporting a potential for 200,000 MW of solar power in . September 2021 Additionally, Indonesia has one of the largest geothermal potentials globally, ranking as the world’s second-largest geothermal power-producing country in . 2022 However, it is Indonesia’s rising importance in the electric vehicle (EV) supply chain ecosystem that is truly something to take note of. President Joko Widodo’s focus on promoting growth in Indonesia’s EV and battery production economies has resulted in significant development of Indonesia’s homegrown manufacturing capabilities. With this in mind, Indonesia’s increasing importance in the EV supply chain highlights Indonesia’s status as a potential disruptor to China’s current significant stranglehold on the global EV market. China’s Current Authority Over the World’s EV Industry China has played a significant role in both generating and fueling demand for EVs around the globe. For one, China is the world’s largest EV market, with 6.8 million EVs sold in , compared to 800,000 in the US. 2022 This demand, coupled with China’s long history of manufacturing expertise and relatively low labor costs in comparison to its Western counterparts, has resulted in China becoming a global leader in the production of EVs, with Chinese-based companies occupying seven out of the top ten best-selling plug-in EVs worldwide in . 2022 Additionally, Chinese governmental support and access to raw materials have further enabled China to take the lead in global EV production. The Chinese government has provided many and other incentives to EV automakers and battery manufacturers, resulting in robust EV supply chain growth and development within China. subsidies China is also home to some of the of key raw materials necessary for EV production, including lithium, cobalt, and nickel, thus providing Chinese-based companies with a competitive advantage in the production of batteries for EVs. world’s largest reserves Why Indonesia, and Why Not America or the European Union? Major demand for EVs in developed markets such as the United States and the European Union place these two regions top-of-mind for most when it comes to challenging China’s preeminence in the EV supply chain. However, the complex bureaucratic nature of these developed markets has resulted in relatively slow progress when it comes to creating homegrown EV production efforts. In the United States, governmental support for EV manufacturing through efforts like President Biden’s , which invests “$7.5B in EV charging, $10B in clean transportation, and over $7B in EV battery components, critical minerals, and materials” passed in , with more EV-specific actions being passed only recently in . Bipartisan Infrastructure Law November 2021 February 2023 Additionally, while the EU has taken efforts to prioritize EV production through legislation like the Critical Raw Minerals Act and the Net-Zero Industry Act announced in , significant challenges like continue to plague the development of homegrown EV supply chain efforts in both regions. March 2023 differences in American and EU subsidies In contrast, long-standing Indonesian government support for EV and EV battery production, significant infrastructure investment, and abundant natural resources support Indonesia’s potential as a primary disrupting force to China’s current EV monopoly. Indonesia’s announcement of its goal for having EVs make up 20% of all domestic vehicles manufactured by 2025 was backed by the issuance of Presidential Decree No. 55 in , with this legislation aimed at further enabling EVs to be produced and deployed throughout the country. August 2019 This news followed the announcement of a Mitsubishi effort to research the effectiveness of EVs in Indonesia in , which itself was followed by the announcement of a $4B Indonesia EV battery project in . February 2018 November 2018 It is through early mover actions such as these that highlight Indonesia's potential to be a significant disrupting force to China’s current monopoly on the EV supply chain market. Indonesia’s Growth Potential in the EV Space Indonesia’s critical status as the home of the , a key component in EV battery production, makes it an attractive part of the global EV supply chain. world’s largest nickel reserves The growth potential of this fast-paced industry is reinforced by the fact that Indonesian nickel company Harita Nickel (Trimegah Bagun Persada) is currently Indonesia’s biggest IPO in . 2023 Additionally, Indonesia’s PT HKML Battery Indonesia, Indonesia’s first EV battery plant built as a joint effort between an Indonesian and South Korean consortium, is slated to begin production in , with construction efforts already breaking ground in . 2024 April 2022 Furthermore, major EV manufacturers are already flocking to Indonesia in recognition of Indonesia’s critical importance in the EV supply chain. Indonesia announced Mitsubishi Motors’ plan to invest over $650M in Indonesia over a three-year period in , Tesla and BYD finalized EV investment deals in Indonesia in , and Ford followed suit through a announcement of a $4.5B investment in Indonesia. July 2022 January 2023 March 2023 Additionally, in , the Asian Development Bank granted Indonesia a $500M loan to expand private sector investments in clean and renewable energy, among other initiatives, following the announcement of Indonesia’s pursuit of a net-zero target by 2060, further supporting the push for Indonesia’s growth in the EV space. November 2022 July 2021 Additionally, the Indonesian government has also taken strategic steps to reduce the country’s heavy reliance on coal and other fossil fuels. Indonesia’s leadership at the G20 summit in 2022 resulted in the signing of the landmark , a $20B agreement to help Indonesia move away from fossil fuels. Just Energy Transition Partnership Additionally, in , a new governmental regulation was announced to retire some coal plants early, with the government helping to absorb any potential losses to reduce Indonesia’s reliance on fossil fuels, further contributing to Indonesia’s EV ambitions. September 2022 Conclusion All told, Indonesia holds significant promise to be a disruptor of China’s current dominance of the EV supply chain. While there are still many challenges that must be addressed for Indonesia to realize this potential, including the high costs of EVs in a country with , a possible shortage of raw materials like for EV battery production on the horizon, and reliance on Chinese firms for foreign capital and technical know-how like in the of the Indonesia Investment Authority’s establishment of a special fund with Chinese battery giant Contemporary Amperex Technology, continued strong governmental support has resulted in an optimistic future for the growth of Indonesia’s presence in the world’s EV supply chain. relatively low car ownership lithium use-case Additionally, private economic investment has further accelerated Indonesia’s importance in the global EV production industry, reinforcing the notion that Indonesia could play a significant role in disrupting China’s current dominance of the EV supply chain ecosystem.

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Indonesia’s Growing Potential as a Disruptive Force Against China’s EV Supply Chain Monopoly

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