Published: 04:30 PM, 13 June 2025
China Moves in: Indonesia’s EV Strategy Shakes Up Global Battery Politics
Indonesia’s flagship electric vehicle (EV) battery consortium has come under the spotlight of the global community following the removal of South Korea’s LG Energy Solution and the potential entry of Beijing-backed Zhejiang Huayou Cobalt. The development has intensified geopolitical and economic concerns about Beijing’s growing dominance in the global EV supply chain. In fact, Huayou had already expressed its interest in the Titan project as early as last year, and it already had “the technology.” The intention was clear: China has been increasing its influence in neighbouring Indonesia’s burgeoning EV supply chain.
The $9.8 billion electric vehicle (EV) battery project, also known as the Titan Project, is part of Indonesia’s plan to climb the value chain in battery manufacturing. Indonesia has some of the world’s largest nickel reserves. The project is aimed at turning those resources into high-value battery components to put Indonesia on the map as a battery powerhouse. In recent years, Indonesia has developed the nickel downstream industry to drive the development of its EV ecosystem.
Analysts have claimed that the Indonesian government was not entirely comfortable with China’s Huayou Company, but the exit of LG left it with no option but to accept the proposal. They concede that China’s expanding presence in the EV sector can significantly reshape the regional dynamics of the industry, as the balance may tilt towards Beijing. China’s expanding presence in the EV sector could reshape regional dynamics as Indonesia leverages its rich nickel resources to attract investments. As Indonesia leverages its natural resources, it may face challenges in accommodating non-Chinese firms navigating the increasingly complex investment landscape, they added.
It’s too early to know how that will play out, but it clearly sends a signal that the door is open for China to comfortably integrate itself further into Indonesia’s green manufacturing ecosystem and strengthen ties with Indonesia—especially if other foreign firms are pulling out.
China, which is positioning itself as a country ready to fulfil Indonesia’s EV ambitions, has already begun showing its dominance. China’s Contemporary Amperex Technology Co. Ltd. (CATL) recently slashed its investment in an Indonesian battery project by more than half, citing concerns over market shifts. The fact that battery technology remains very much in flux is a substantial risk to long-term investment—even LFP projects are not immune, stated The Jakarta Post in its editorial. CATL launched a new battery technology earlier this month that uses neither nickel nor lithium, but instead sodium, which is even more affordable.
News reports have noted that the EV battery industry has major negative environmental and social impacts. A huge amount of new captive coal energy has been built to power this industrial activity. Local villagers have been left to face the environmental destruction caused by the nickel-processing industry involved in making EVs—much of which is still fuelled by coal—as well as threats to their lands and livelihoods. Analysts have raised questions about whether China would seriously address such crucial issues or ignore them entirely.
The EV revolution comes with its own dirty cost. The materials that go into today’s batteries—such as nickel, lithium, and cobalt—are in extreme demand. Prices for these minerals are soaring. For the countries in which these elements are buried, the EV boom promises profits. But it also means massive extraction efforts—and the environmental and social issues that these cause. China, which has pledged to be carbon neutral by 2060 and will need almost 90% of its vehicles to be fully electric by 2035 to meet its target, now dominates mining activities for EV battery materials in these countries. But the extraction leaves deep scars on the landscape. Across multiple islands in Indonesia, it has led to disruption of local environments and traditional ways of living for local communities, who face their lands being transformed.
China already dominates most of the global EV battery value chain. Its companies, such as CATL and BYD, control significant market share across the production, processing, and recycling of key battery components. With Huayou already operating in Indonesia through its nickel ventures in Weda Bay, their elevation into the national consortium would consolidate China’s upstream and midstream battery operations in Southeast Asia.
The development has come as a big setback for South Korea, the United States, and the European Union, as these countries have been trying to curb China’s tightening grip over key components of the green energy transition.
Meanwhile, Australia is feeling the pressure to figure out how best to partner with Indonesia in the current scenario. It’s worth noting that Indonesia and Australia had agreed to work together to develop the electric vehicle (EV) ecosystem in February last year. Experts said that Australia has been losing out to Indonesia when it comes to nickel mining and sales, but they’re also trying to get involved in the lithium sector. While Indonesia has lithium, it doesn’t have as much in the way of proven reserves as Australia. Australia also has the expertise to mine it independently. It remains to be seen how Australia will try to leverage that point with Indonesia to co-produce batteries in the future and possibly counter China, experts added.
>> Source: Financial Post
