Indonesia's Battery Ambitions Tied to China, Amid Rising Concerns

Indonesia's goal to use its nickel riches to become a global battery manufacturing hub and a base for electric vehicle (EV) production in the region has been kept afloat by Chinese investment. However, this dependence on China for capital, technology, and materials has raised concerns about the country's ability to develop its own battery ecosystem.

## Background The Indonesian government has been trying to develop its mineral wealth to power the batteries needed for the energy transition. However, the country's success has been largely limited to developing a stainless steel industry, which is the biggest consumer of nickel globally. In 2025, more than 80% of Indonesia's nickel supplied the stainless steel sector, with only 17% going into the EV battery supply chain.

## Battery Ecosystem Developing a battery industry has proved to be a lot more difficult for Indonesia. Several plants to process nickel into battery-grade materials are planned or under construction across the country, but many remain at early stages of development. The nation's first battery cell plant in Karawang, West Java, began operating in 2024, and it is expected that 30% of Indonesia's nickel production will go towards making battery materials by 2028.

## Comparison of Battery Types The following table compares the characteristics of different battery types:

## Future Prospects Indonesia's reliance on China does not stop at money and technical knowledge, but also extends to Chinese imports of key battery materials, such as lithium and graphite. To reduce its dependence on China, Indonesia should aim to diversify its investment partners and seek long-term supply deals with major producers. The country's ability to develop its own battery ecosystem and reduce its reliance on external players will be crucial to its success in becoming a global battery manufacturing hub.

The Indonesian government has stated that collaboration with Chinese firms is expected to encourage technology transfer, allowing national companies to become leaders in their own country. However, without a transfer of technology, Indonesia risks remaining dependent on external players for the most advanced parts of the value chain. As the country moves forward with its battery ambitions, it will be important to balance its reliance on Chinese investment with the need to develop its own capabilities and reduce its dependence on external players.