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Toyota anoints Indonesia as its Electric Vehicle hub for Asean

POSTED BY Yamin Vong ON 10 July 2019

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Indonesia will lead Asean’s Electric Vehicle (EV) industry.

Following the G20 summit in Osaka last month, Indonesian officials and Toyota Motor Corporation’s president Akio Toyoda agreed on locating a USD1.9 billion EV and PHEV manufacturing hub in Indonesia.

This answers one of the most profound questions amongst automotive industry participants and observers in Malaysia about the upcoming review of the National Automotive Policy and whether there will be anything for EVs and Malaysia’s positioning in Asean for the most profound change in the global automotive industry.

According to a just-auto.com report, Toyota plans to invest up to JPY210bn (US$1.9bn) in Indonesia by 2023 to produce electric and plug-in hybrid vehicles, according to reports in Japan citing Indonesian government sources.

The news followed a meeting held last week between Toyota Motor president Akio Toyoda and Indonesian government officials on the fringes of the G20 Summit in Japan.

Just-auto.com reported: Such an investment would make Indonesia a regional manufacturing hub for the Japanese carmaker to rival Thailand. The company initially plans to produce hybrid vehicles in the country, to be followed by electric vehicle (EV) at a later stage.

It would make Indonesia a key part of Toyota’s strategy of selling around 5.5m units electric and plug-in hybrid vehicles globally, or 50% of total sales, by 2025.

Mr Toyoda is quoted separately as saying “the Indonesian government already has an EV industry development strategy, which makes the country a strong candidate for EV investment”. It also has significant natural resources that also favour lithium-ion battery production.

Toyota currently has a production capacity of 250,000 vehicles per year in Indonesia and produced over 180,000 built-up vehicles (CBU) in 2018. The company’s small-car subsidiary Daihatsu is Indonesia’s largest vehicle producer with CBU output of around 512,000 units last year, most of which was supplied to Toyota.

 

Asked to comment on this, veteran Asean automotive industry analyst, Urs Muller is not so sure that Indonesia can topple Thailand’s current leadership in Asean’s EV industry.

[email protected] said:
Early this year Indonesia set the target to produce 20% of all locally manufactured cars to be electric by 2025.The focus is not on EVs alone; this strategy is all about the country’s natural resources.

Sulawesi is rich in nickel laterite ore, an ingredient of the lithium ion batteries, used to power EVs. The Morowali site currently has 20 nickel ore processing facilities that feed 1.5 million tonnes of nickel pig iron a year into a three-million tonne-per-year stainless steel mill.

This site will become the region’s largest lithium ion battery plant. This US$4 billion plant is supposed to start production latest by early 2021. Investors in this lithium ion battery plant are among others GEM Co Ltd, Contemporary Amperex Technology Ltd and Tsingshan Holding Group. Further Pertamina will team up with Aneka Tambang to make batteries.

Indonesia has plentiful reserves of nickel laterite ore, a vital ingredient in the manufacture of lithium-ion batteries, and government authorities are looking for the country to tap into those reserves to become a major regional player in lithium battery production.

Indonesia is now in talks with a number of unnamed Japanese, Korean and Chinese companies to partner up in the project. Among them certainly are Toyota as well as Hyundai, which already invested USD 880 million in Indonesia to produce EVs in December 2019. Also Mitsubishi has announced collaboration with the Indonesian government in an EV infrastructure research program. Although EVs were not mentioned, VW and Renault are also planning local assembly in Indonesia

Toyota will start production of EVs in Indonesia, by investing US $ 2 billion in the project from 2019 till 2023, starting with the development of hybrid vehicles. Further details on Toyota’s investment implementation have not yet been disclosed.

In order to attract manufacturers and investors, Indonesia has put in place a tax incentive for battery producers and EV manufacturers. In addition, Indonesia is ready to offer preferential tariff agreements linked to emissions (0 to 30% based on the CO2 emissions) with countries sourcing EVs from Indonesia. The incentive applies to affordable energy-saving vehicles (KBH2s), hybrid EVs, plug-in HEVs, flexible-fuel vehicles (FFVs) and EVs.

 

The feasibility of the timelines is questionable: many large projects (infrastructure, airport, metro etc.) weren’t finalised on time or within budget. In addition, even with natural resources present, nickel smelter technology is complicated and requires industry acumen that Indonesia hasn’t acquired yet.

Furthermore, Indonesia has no charging infrastructure today. The entire vehicle energy sector is operated by the government and is particularly conservative.  Indonesia is the region’s second car manufacturing hub, but it has not yet manufacturing capabilities like Thailand.”