A new report from the Center for Global Sustainability explores Indonesia's efforts to transition to an electric vehicle (EV) economy under President Joko Widodo and the ongoing plans of President Prabowo Subianto to maintain this momentum. The analysis identifies key actions to accelerate EV adoption, reduce emissions, and establish a domestic battery electric vehicle (BEV) manufacturing industry. However, it highlights significant challenges, including infrastructure gaps, environmental concerns, and global market shifts that could impede progress toward the country’s EV and emissions targets.
As global demand for electric vehicles grows due to sustainability goals, Indonesia aims to leverage its abundant nickel reserves—critical for EV batteries—to support this shift. Under President Widodo, Indonesia introduced Presidential Regulation No. 55/2019 (PR55/2019), which outlines a roadmap for EV and battery production, with a target of 140 GWh by 2030. While foreign investments have flowed into the sector, progress has been uneven, leaving the country with an uncertain future.
“Indonesia, holding 22% of global nickel reserves and producing 51% of the world’s nickel, is poised to be a key player in the EV market,” said Jonah Pereyra, CGS Research Assistant and lead author of the report. “As President Prabowo takes office, continuing this vision remains crucial, but achieving these ambitious goals will require careful management of the social, environmental, and economic trade-offs.”
Despite attracting over $30 billion in foreign investment—thanks to PR55/2019—Indonesia struggles to meet production targets. While nickel export bans have increased refining capacity by 800%, the growth of battery manufacturing has been slow, hindered by global nickel oversupply and shifting investment trends. Domestic nickel mining, particularly from lateritic ores, remains a major contributor to CO2 emissions, deforestation, and ecosystem damage.
Moreover, Indonesia’s current energy mix contributes to a significant carbon footprint in EV battery production. Battery manufacturing requires 3,000-6,500 kWh of energy per unit, resulting in CO2 emissions of 2.4 to 5.3 tons per battery. Total emissions for producing an EV range between 6,300 and 9,100 kg CO2e—considerably higher than the 9.2 tons from traditional ICEV production. Reducing these emissions will require improvements in battery technology, manufacturing efficiency, and a transition to renewable energy within Indonesia’s energy grid to meet global environmental, social, and governance (ESG) standards.
"Indonesia’s nickel processing boom has not yet led to a significant rise in local battery production, posing a key challenge to fully capitalizing on its nickel reserves and achieving EV manufacturing goals," said Claire Squire, CGS Post-Masters Research Associate and report co-author. "To succeed, Indonesia must adopt energy-efficient, sustainable production methods and invest in cleaner technologies and renewable energy, setting a global standard for responsible EV manufacturing."
To stimulate EV adoption, Indonesia has introduced tax cuts and subsidies, targeting two million electric cars and 13 million electric motorcycles by 2030. However, the adoption rate remains sluggish, with only 17,000 EVs and 52,000 hybrids sold in 2023, and just 25,000 BEVs produced over the last two years. High vehicle costs remain a key barrier, making BEVs unaffordable for most Indonesians without continued government support. To meet its 2030 goals, Indonesia will need to boost incentives, improve infrastructure, and make EVs more competitive with traditional vehicles.
"Targeted subsidies have boosted EV sales, but scalability remains a challenge. Expanding charging networks, tackling range anxiety, and maintaining affordability through ongoing policy support is crucial for long-term EV growth," said Jiehong Lou, CGS Assistant Research Director and co-author. "Public-private partnerships will be key to driving innovation in EV manufacturing, clean energy, and grid expansion, enabling Indonesia to transform its transportation sector and set a global standard for sustainable mobility."
While Indonesia aims to build 32,000 EV charging stations by 2030, only 440 charging stations and 960 battery swap stations exist as of 2023, mostly in urban areas. To meet its target, Indonesia needs to build 70 times more stations. PLN aims for 6,318 stations by 2025, but substantial investment is still required. Innovative solutions, such as mobile charging stations and smaller units mounted on electricity poles, could help alleviate costs and improve accessibility. However, rural regions face significant infrastructure gaps, and challenges related to deforestation, mining pollution, biodiversity loss, and social issues like land disputes persist.
"Indonesia’s EV and nickel industries face risks from coal power, deforestation, and ESG challenges,” said Thomas C. Hilde, CGS Senior Fellow and co-author of the report. “To build a green, export-driven EV supply chain, the government must prioritize decarbonization, invest in renewables, reduce coal use, address land use change, and promote sustainable mining and battery technologies. This will help transform Indonesia’s transportation sector and position it as a leader in sustainable growth and green energy."
The report highlights both the promise and the hurdles of Indonesia's transition to an electric vehicle (EV) economy. With its rich nickel reserves, Indonesia is well-positioned to become a global leader in EV production, yet significant challenges remain. For Indonesia to secure a prominent role in the global EV supply chain, it must address key obstacles, including meeting global ESG standards, transitioning to a cleaner energy mix, and expanding the infrastructure necessary to support large-scale EV adoption.
Download the report to learn more!
