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As India puts off Elon Musk, Indonesia swoops in to grab Tesla manufacturing opportunity

Indonesian President Joko Widodo suggested Musk set up Tesla's entire supply chain in the country.

June 21, 2022 / 11:43 AM IST

Indonesia is trying to get Elon Musk to set up Tesla's manufacturing facilities in the Southeast Asian country.

Its president Joko Widodo has said the government has been in talks with Tesla as well as Ford and other car companies for setting up of facilities, CNBC reported on June 20.

Both Tesla and Ford have rolled back their expansion plans in India over issues including tough business conditions and tax tussle. In September 2021, Ford announced its decision to close its plants in India due to unviable business conditions. The company had recorded operating losses of more than $2 billion over the past 10 years.

Last month, Elon Musk said that his company will not manufacture its electric cars in India unless it is allowed to first sell and service them locally.

Cashing in on the emerging opportunity, Widodo met the Tesla CEO in May after US President Joe Biden hosted a summit for Southeast Asian leaders.

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“We had a lot of discussions, particularly on how Tesla can build their industry from upstream to downstream, end-to end starting from smelter then build the cathode and precursor industry, build EV batteries, build lithium batteries [and] then the vehicle factory. Everything in Indonesia, because that’s very efficient. That’s what I offered,” Widodo told CNBC in an interview.

Resource-rich Indonesia, Southeast Asia’s largest economy, offers cheap labour and has abundant natural deposits which are key for electric vehicle batteries.

The nation has banned exports of unprocessed nickel and coal to boost domestic manufacturing capacity.

Indonesia expects EVs to make up 20% of all automobiles produced in the country in 2025. It is also offering tax incentives for auto manufacturers to whip up new investments in the EV space.

In March, South Korea-based Hyundai started full-scale production at its new electric vehicle factory in Indonesia.

China's SAIC-GM-Wuling Automobile unveiled a new mini EV earlier this month which is expected to start production soon.
Ravi Prakash Kumar
first published: Jun 21, 2022 11:10 am
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