Why Indonesia's EV push is about more than just electric cars

Nickel downstreaming represents a strategic step toward strengthening energy security, accelerating the clean energy transition, and achieving greater national energy independence.

Jakarta (ANTARA) -

A Chinese electric car was cruising through the streets of Jakarta toward Halim Perdanakusuma International Airport. As a light late-June rain began tapping against the car windows, Juliansyah, the driver, began to speak.

"If I were driving this (electric car), I should not have to worry too much (about flooding)," Juliansyah said, emphasizing the word 'should'.

Although many electric vehicle (EV) drivers have successfully navigated floodwaters, Juliansyah did not deny a pang of anxiety about doing the same since he was not driving his own car.

His car was a rental from the vendor he worked for as an online taxi driver. Therefore, if anything happened to the car, he would be held responsible and could lose his job.

As the conversation continued, Juliansyah said many of his fellow ride-hailing drivers had begun switching to electric vehicles through partnerships offered by their companies.

He said the arrangement was more economical than owning a car, which requires drivers to cover loan payments, taxes, and maintenance costs.

"(The difference) is only when charging. It takes about an hour. I use that time to rest and sleep," he explained.

He typically charges his electric car two to three times a day—once in the morning before starting work and in the afternoon or evening.

The growing number of ride-hailing drivers, like Juliansyah, adopting electric vehicles reflects a gradual transition away from conventional cars at the community level.

It also points to rising public interest in electric cars, especially as geopolitical conflicts have exposed the volatility of fuel prices.

Related news: Indonesia not to fear global China EV competition: AHY

Energy security

A similar trend is also occurring in other countries, for example, Germany, where demand for used electric cars has soared throughout 2026 as fuel prices have risen, triggered by the conflict in the Middle East.

Der Spiegel magazine, citing data from the German Federal Motor Transport Authority (KBA), reported on June 1 that the fuel price hike is driving more people to switch to electric vehicles.

The report said nearly 120,000 used electric vehicles were sold across Germany during the first four months of 2026. This number is almost double the number sold in the same period in 2025 and almost triple the number sold in the first four months of 2024.

In Jakarta, according to Moch Andy Adchaminoerdin, General Manager of PLN UID Jakarta Raya, the number of EV users had increased ninefold by the end of April 2026.

Andy also estimates that the number of electric vehicle users in the capital will continue to increase as fuel prices rise amid the US-Iran conflict.

The data suggest that consumers increasingly view electric vehicles as a more resilient option amid geopolitical uncertainty than conventional vehicles.

The Director of the Energy Shift Institute, Putra Adhiguna, believes that the development of an electric vehicle ecosystem in Indonesia plays a crucial role in strengthening national energy security.

He noted that Indonesia relies on imports to meet around 60 percent of its oil demand, while domestic oil production continues to decline naturally.

"Electric vehicles are crucial for energy security and for driving structural change," Adhiguna remarked.

In line with efforts to strengthen national energy security, the government continues to support the development of an electric vehicle ecosystem. In May 2026, the Minister of Finance, Purbaya Yudhi Sadewa, said the government was preparing incentives for 100,000 electric cars and 100,000 electric motorcycles this year, aimed at encouraging electric vehicle sales while strengthening the domestic EV industry ecosystem.

The government is also accelerating the development of the battery industry ecosystem through the establishment of PT Industri Baterai Indonesia (IBC), which brings together the MIND ID group under the coordination of Danantara Indonesia.

This growing awareness reflects an increasing recognition that developing the electric vehicle ecosystem is closely linked to strengthening national energy security.

In this context, Indonesia's abundant natural resources are central to the transition.

Related news: Indonesia targets US$121 billion EV battery investment push

Nickel downstreaming

In discussions about the electric vehicle ecosystem, the battery industry is frequently cited as one of the sector's most crucial components.

As a country that controls more than 40 percent of the world's nickel reserves, Indonesia has the capacity to support the long-term needs of the nickel-based battery industry. Therefore, IBC serves as an ecosystem orchestrator.

An economist from Padjajaran University (Unpad), Yayan Satyakti, views Indonesia's electric vehicle ecosystem as having a strong foundation, while noting that a number of strategic risks still need to be managed.

This strength rests on the world's largest nickel reserves, a downstreaming policy coupled with a ban on nickel ore exports, the successful development of domestic nickel smelters and supply chains, and the decline in global battery prices to around US$99–115 per kWh, which has surpassed the psychological threshold of US$100.

With this capital, the cost of ownership of electric vehicles should become more competitive than conventional vehicles within about five years.

However, Yayan identified four challenges in the development of the electric vehicle ecosystem in Indonesia.

First, the market shift toward lithium iron phosphate (LFP)-based batteries, instead of nickel manganese cobalt (NMC). LFP's market share has reached approximately 50 percent of the global electric vehicle battery market by 2025.

In Indonesia, more than 90 percent of electric cars sold also use LFP batteries.

The second challenge is Indonesia's heavy reliance on nickel-based batteries. According to Yayan, the country cannot afford to depend solely on NMC technology, as doing so would run counter to market trends.

He added that mandating the use of NMC batteries could discourage investment in the electric vehicle industry.

The third challenge relates to ore quality and resource depletion. Most of Indonesia's nickel reserves are classified as Class 2, making them more suitable for stainless steel production than battery-grade applications. As a result, substantial investment in High Pressure Acid Leaching (HPAL) technology remains necessary to produce battery-grade nickel.

On the other hand, while nickel reserves are estimated to be sufficient for around 30 years, saprolite reserves, or high-grade ore for battery raw materials, are estimated to last only about 13 years. Overly aggressive downstreaming also risks accelerating the depletion of high-grade ore, requiring careful management of production rates.

The fourth issue concerns the electricity sources powering the electric vehicle industry. According to Yayan, smelters and parts of the national power grid continue to depend heavily on coal, diminishing the environmental credentials of electric vehicles and the export competitiveness of Indonesian batteries.

To address these challenges, he proposed expanding battery-grade nickel production through HPAL technology, transitioning smelters and the electricity grid to renewable energy, managing nickel reserves to extend their economic life to 30–40 years, and developing a more balanced battery ecosystem that supports both NMC and LFP technologies while strengthening the recycling industry.

Besides electric vehicles, Indonesia's nickel downstreaming also has the potential to support the development of Battery Energy Storage Systems (BESS), a crucial component in the energy transition from dependence on coal to clean energy.

With its abundant natural resources, Indonesia has a solid foundation for building a self-sufficient electric vehicle ecosystem. However, the significance of nickel downstreaming extends far beyond the ambition of becoming a global battery powerhouse.

Nickel downstreaming represents a strategic step toward strengthening energy security, accelerating the clean energy transition, and achieving greater national energy independence.

Related news: Indonesia accelerates EV push to cut fossil fuel use

Editor: M Razi Rahman

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