- Nickel and cobalt account for 22% of battery pack costs
- Indonesia industrial electricity prices 11% lower than China
Indonesia’s desire to move up the value chain and leverage its nickel wealth into becoming an EV and battery manufacturing hub is supported by the fact that it may have the lowest manufacturing costs in Asia.
The country has some of the lowest labor costs and industrial power prices in Asia, supported by government subsidies. Labor and electricity account for around 6% of total battery pack costs. Indonesia is also endowed with reserves of nickel and cobalt, key battery raw materials which make up 22% of total battery pack costs.
BloombergNEF estimates that total battery pack manufacturing costs in Indonesia can be 8% lower than in China.
One downside to Indonesia’s low electricity price is its grid carbon intensity, which is one of the highest in the region at 711 grams of CO2/kWh. This may turn away manufacturers looking for low carbon energy sources for their plants. However, the country aims to develop new hydro and geothermal power projects that it says will be able to supply the industry with cheap, low-carbon electricity.
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