Not India, Elon Musk May Choose Indonesia As Tesla's Production Hub In Asia

As India continues to hum and haw over electric vehicle import duty cuts sought by Elon Musk, the Tesla CEO is now headed to meet Indonesia¡¯s President Joko Widodo as he scouts sites to finalize Tesla¡¯s new production hub in Asia.

Earlier this week, Luhut Binsar Pandjaitan, who is the coordinating minister of investment and maritime affairs in Indonesia, said the Indonesian President plans to meet Musk on the sidelines of the summit of Southeast Asian leaders in Washington later this week, as per a CNBC report.

Notably, Indonesia is the top producer of nickel, which is a key metal for batteries.

In recent months, Indonesia has grabbed the attention of several battery and car manufacturers through its variety of incentives.

With a friendly policy bolstering the country¡¯s EV goals, manufacturers have started committing billions of dollars. LG Energy Solution, along with other companies, is investing about $9 billion to set up a supply chain, from mining to manufacturing, in the country. Together with Hyundai Motor Co., the firm is developing a battery plant, too, as per a Bloomberg report.

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Meanwhile, the world¡¯s largest powerpack maker Contemporary Amperex Technology Co. too is investing almost $6 billion in a battery project with state-backed PT Aneka Tambang Tbk and PT Industri Baterai Indonesia. And that¡¯s not all. China¡¯s Zhejiang Huayou Cobalt Co. and PT Vale Indonesia Tbk announced last month they would work together on the former¡¯s fifth nickel project in Indonesia.

All these recent moves surrounding Southeast Asia¡¯s largest economy Indonesia shows how important it is to be close to the source of raw materials that feed into manufacturing. If there¡¯s one thing the past year of logistical screw-ups and delays has shown the industry, it¡¯s that proximity is key.

And Tesla certainly knows this well. It has created large manufacturing hubs in China and now Germany, both of which countries are known for their prowess in industrial production and policies that will help sell their cars.

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Missed Opportunity For India?

If Elon Musk decides to finalize Indonesia as Tesla¡¯s production hub in Asia, it is fair to say that it will be a missed opportunity for India.

Earlier this month, Adar Poonawalla, who is the CEO of the Serum Institute of India, had tweeted that putting capital into making cars in India would be the ¡°best investment¡± Musk would ¡°ever make.¡±

Hey @elonmusk just in case you don't end up buying @Twitter, do look at investing some of that capital in INDIA for high-quality large-scale manufacturing of @Tesla cars. I assure you this will be the best investment you'll ever make.

¡ª Adar Poonawalla (@adarpoonawalla) May 8, 2022

Last month, India¡¯s Minister for Road Transport and Highways Nitin Gadkari too had invited Musk to manufacture e-vehicles in India, highlighting the present conducive environment for automobile manufacturing in the country. However, he said building cars in China and selling them in India cannot be a "good proposition".

Now it remains to be seen what the world's richest person Elon Musk decides to do after the much-anticipated meeting with Indonesia's President. After months of a tiff with the Indian govt surrounding the cut in import duty for EVs, the chances of Musk making India the hub for Tesla production in Asia look bleak, at least for now.

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