Thailand may have become the second South East Asian country after Singapore to setup a Tesla store but Indonesia has no intention of following Thailand’s footsteps in become a mere sales agent. Instead, Indonesia wants Tesla to setup a 500,000 cars per year manufacturing facility there.

The carrot? The Indonesian government is offering Tesla access to renewable geothermal-generated electricity (up to 400 MW to be made available to the proposed region), which will have a positive impact on Tesla’s supply chain’s green credentials, itself an audited criteria for many public listed company, which Tesla is.

A report by Indonesia’s Jakarta Post said the country’s Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan 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 that covers mineral processing, manufacturing of battery sub-components including cathodes and precursors, battery packaging, as well as recycling.

Also read: Indonesian President Jokowi rode a Genesis G80 EV to officiate LG's RM 43 billion EV battery materials plant

“We could [...] channel this green energy [to Tesla’s factory],” Luhut told lawmakers during a meeting with the House of Representatives Budget Commission.

The daily also added that Indonesia has been increasingly protective of its new and renewable energy sources as it is making a commitment to decarbonizing its economy - the focus of its Group of 20 leadership, which Indonesia is the President this year.

“While Thailand has just become an agent [of Tesla cars], we do not want the same. We want to become a producer,” Luhut said.

Also read: Tesla Thailand registered, official Model S, 3, X, and Y for the Kingdom?

The daily also said that President Jokowi is considering to ban export of renewable energy, as such actions will indirectly drive investments into green technology to those countries.

Indonesia has recently signed a renewable energy export deal with Singapore, exporting solar panel-generated electricity from Batam.

The country has also ban the export of nickel, an important raw material used in EV battery manufacturing.

Although Indonesia is pitching the Batang Industrial Estate to Tesla, Minister Luhut said that Tesla has also expressed interest in another location, the North Kalimantan Green Industrial Park, whose construction began in December 2021.

While Batang will be powered by geothermal energy, the North Kalimantan will be powered by a combination of solar and hydro power.

Luhut also said that Tesla has shown interest in developing a semiconductor industry in Indonesia, but can’t reveal any further details as it has signed a non-disclosure agreement.

Tesla's CEO Elon Musk has since confirmed that he will be travelling to Indonesia in November this year.

It should be noted that semiconductors is an area where Malaysia (specifically Penang) has an edge over Indonesia.

So crucial is Malaysia in the global semiconductor supply chain that our lockdowns in 2020 was part of the reasons behind the shortage in automotive semiconductor parts.

Indonesia understands that the electric vehicle ecosystem is very closely tied with semiconductors, so it wants to expand into that industry too.

At the recent World Economic Forum in Davos, Switzerland, representatives of Indonesia also met up with CEO of Qualcomm Cristiano Amon.

Indonesia’s Minister of Industry Agus Gumiwang Kartasasmita said that his country is building the Indonesia Manufacturing Center to accelerate the development of electronics and IT industry, and is pitching to Qualcomm to assist in its development.

"We (the Indonesian government) are very confident that the investment in electric cars (manufacturing) in Indonesia will go well,” said the minister, who added that his ministry is developing an information and communication technology (ICT) industrial ecosystem.

"Hence, we invite Qualcomm to take part in the (industrial) process," he said.

"Thus, through the meeting, we expect that Qualcomm can assist in the development of the center."