VW to Join Hands with Several Companies to Build Indonesia's Electric Vehicle Battery Ecosystem

Indonesia's Investment Minister Bahlil Lahadalia said Volkswagen will build an electric vehicle battery ecosystem in the country and will work with miner Vale, automaker Ford and Chinese battery mineral producer Zhejiang Huayou Cobalt, according to foreign media reports.

Current automakers are looking to get Indonesia to provide the raw materials used to produce batteries for electric vehicles, the highest-cost component in electric cars, accounting for about 40 percent of the car's selling price. This is a move by car companies aimed at reducing costs and closing their gap with Tesla.

Lahadalia said in a video statement that VW, Europe's largest automaker, will partner with several Indonesian companies including Vale, Ford, Huayou, French miner Eramet and Merdeka Gold Copper, the parent company of Merdeka Battery, and energy company Kalla Group. The cooperation of several partners will include the establishment of joint ventures and the supply of raw materials.

VW, Ford, Eramet, Merdeka Battery, Kalla Group and Merdeka Gold Copper did not immediately respond to requests for comment, and PT Vale Indonesia declined to comment.

Indonesia has the world's largest nickel reserves and the country has been working to develop a downstream industry for the metal, with the ultimate goal of producing batteries and electric cars.

Last month, Ford signed its first investment project in Indonesia. Together with Vale Indonesia and Huayou, Ford will invest $4.5 billion in a nickel processing plant in Pomalaa, Southeast Sulawesi province.