JAKARTA — The Indonesian government’s plan to provide incentives for electric vehicles based on nickel-manganese-cobalt (NMC) batteries is considered a strategic step to accelerate national nickel downstreaming and promote national economic sovereignty.

Government policies are expected to boost electric vehicle sales and also strengthen the development of the domestic nickel-based battery industry, thereby generating greater added value.

ENTREV Project Coordinator Eko Adji Buwono assessed that incentives for NMC-based electric vehicles are an important signal that the government is starting to direct nickel downstreaming to high-value-added manufacturing industries.

“IBC [a member of the MIND ID Holding Group] is currently the only government-owned company mandated to build and develop the nickel-based battery industry. Without the support of policies that prioritize nickel-based batteries for domestic use, it will be difficult to compete with lithium iron phosphate (LFP)-based batteries,” said Eko.

According to Eko, policy alignment is crucial for optimal growth of investments in the national battery ecosystem. Indonesia is currently developing a nickel-based battery supply chain, from mining and processing to battery cell manufacturing.

IBC, through its electric vehicle battery factory, PT Contemporary Amperex Technology Indonesia Battery (CATIB) in Karawang, currently has an initial production capacity of 6.9 GWh. This capacity provides the initial foundation to meet the growing needs of the national electric vehicle industry.

In addition to boosting the added value of minerals, the development of a national battery ecosystem is also expected to strengthen economic sovereignty, from job creation and increased investment to reducing dependence on imported energy and battery products.

In addition to increasing the added value of minerals, the development of the national battery industry is also expected to strengthen the performance of a broad range of economic sectors, from job creation and increased investment to reducing dependence on imported products.

“There have been various calculations regarding the multiplier effects of downstreaming the battery industry. The most obvious are increased mineral value, job creation, and reduced battery and fuel imports as electric vehicle usage increases,” said Eko.

Previously, Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia stated that the government would prepare incentives for NMC battery-based electric vehicles as part of a strategy to strengthen the national electric vehicle ecosystem.

According to Bahlil, nickel-based electric vehicles are a priority because Indonesia has abundant nickel resources and is currently developing an NMC-based battery industry.

He believes that nickel-based batteries also have advantages for vehicles with longer ranges compared to lithium iron phosphate (LFP)-based batteries, even though their production costs are relatively higher.

Meanwhile, Finance Minister Purbaya Yudhi Sadewa previously revealed that the government is preparing electric vehicle incentives targeted at covering 100,000 electric cars and 100,000 electric motorcycles this year.

For electric motorbikes, the government has allocated an incentive of IDR 5 million per unit, while for electric cars, a Government-borne Value Added Tax (PPN DTP) scheme of 40 percent to 100 percent has been prepared.

The government is also reviewing incentives based on battery type, including distinguishing between nickel-based and non-nickel electric vehicles. This policy is expected to strengthen the competitiveness of the national battery industry and accelerate Indonesia’s nickel downstreaming agenda.

With comprehensive policy support, the integration of the national nickel supply chain will accelerate Indonesia’s transformation from a raw material exporter to a producer of high-value-added materials and products.