JAKARTA, Feb 1 (Reuters) – Indonesian President Joko Widodo is confident Tesla Inc ( TSLA.O ) will finalize a deal to invest in a manufacturing base in his country, offering the U.S. carmaker incentives ranging from tax breaks to a nickel mine concession.
Southeast Asia’s biggest economy is persuading Tesla to invest in battery and car production from 2020, seeking to tap its rich reserves of nickel ore that can be processed for use in electric car batteries.
The president, widely known as Jokowi, has held talks with Tesla CEO Elon Musk twice, meeting him in person at his SpaceX facility in Texas last year and a phone call to try to secure a deal.
“I told him that if you invest in Indonesia, I will give a nickel concession,” Jokowi said, referring to Indonesia’s offer of a mining concession.
Other incentives include tax breaks and an EV purchase subsidy scheme to build a market for Tesla in the world’s fourth most populous country, he said, adding that his ministers were finalizing the subsidies.
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The president said he is “confident” that Indonesia has an advantage over other countries Tesla may consider for investment because it has the largest nickel reserves and a large domestic market.
Jokowi said it was up to Tesla to accept the nickel mining proposal, stressing that Indonesia is open to investment in the EV battery and electric car supply chain.
“If they want to start from an EV battery, that’s fine,” he added.
Tesla did not immediately respond to a request for comment.
Tesla is looking for an additional manufacturing center. The company currently manufactures electric vehicles in four locations: Fremont, California; Shanghai; Austin, Texas and outside of Berlin. Analysts estimate that Tesla will need to build seven or eight more “gigafactories” to meet Musk’s goal of selling 20 million electric vehicles by 2030.
In addition to Indonesia, South Korea, Canada and Mexico are vying for Tesla to invest in manufacturing. A spokesman for Mexico’s president said Tuesday that Tesla is considering setting up an assembly plant near a new airport in Mexico City.
Analysts said Mexico could have an advantage in winning Tesla’s investment because of its proximity to its main market in the United States, an established component supply base and because vehicles made there could qualify for consumer tax credits from the administration. Biden.
A POSSIBLE FIRST FOR ASIA
If Tesla invests in battery manufacturing in Indonesia, it will be its first such facility in Asia. Last month, the company announced a $3.6 billion investment to expand battery production at its Nevada factory.
Jokowi banned nickel ore exports in 2020 to encourage investors to build a vertically integrated supply chain for batteries and electric cars using the metal as raw material.
The ban has led to heavy investment in nickel smelting, mostly from China, but has also been challenged at the World Trade Organization by the European Union, which claims the ban unfairly hurts its stainless steel industry.
Last year, the WTO ruled in favor of the EU, but Indonesia appealed.
Indonesia has also seen growing interest in investment in electric car or battery manufacturing, with South Korea’s Hyundai Motor Co ( 005380.KS ) and LG Energy Solution ( 373220.KS ) already building electric car and battery plants.
Indonesian officials last year said Tesla had signed contracts worth about $5 billion to supply materials for its batteries from nickel processing companies.
Reporting by Gayatri Suroyo, Kate Lamb and Ananda Teresa; Editing by Clarence Fernandez, Robert Birsel
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