Tesla signs 5-year contract worth USD 5b with Indonesia to buy nickel for its batteries

A report by Reuters said Indonesia’s Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan told CNBC Indonesia that Tesla has signed contracts worth about USD 5 billion to buy nickel materials from Indonesia.

"We are still in constant negotiation with Tesla ... but they have started buying two excellent products from Indonesia," said Luhut in the interview broadcast.

He said that Tesla has signed a five-year contract with nickel processing companies based in Morowali in Sulawesi Island. Nickel is a key component in lithium-ion batteries as it increases a battery’s energy density.

Also read: PM Ismail invites Tesla to invest in Malaysia, while Musk enjoys Kopiko in Indonesia

Indonesia has strong ambitions to be an EV and battery producer. The government had proposed to Tesla to build a 500,000 electric vehicles per year plant in Batang, the site where LG has already begun building a USD 9.8 billion (~RM 43.1 billion) end-to-end battery manufacturing facility.

Also read: Indonesia starts work on SEA’s first EV battery manufacturing plant – cuts reliance on commodity exports

The country has also banned the export of nickel to protect its supply for investors.

Meanwhile, Tesla's CEO Elon Musk has confirmed that he will be travelling to Indonesia in November this year, as President Jokowi hosts the 2022 G20 Bali summit in the same month.

Also read: To overtake Thailand, Indonesia makes Tesla a renewable energy offer it cannot refuse