BKPM Acknowledges Downsizing of CATL Battery Ecosystem Investment and Production Capacity
JAKARTA. The Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM) has acknowledged a downsizing in both investment value and production capacity for battery ecosystem projects, particularly the Dragon project.
The Dragon project refers to a collaboration between Indonesia, through PT Industri Baterai Indonesia or Industry Battery Corporation (IBC), and Chinese company Ningbo Contemporary Brunp Legend Co Ltd (CBL), a subsidiary of Contemporary Amperex Technology Co Ltd (CATL). On 16 October 2024, IBC formed a joint venture for battery cell manufacturing with CBL, aimed at boosting the EV battery industry in Indonesia.
According to Deputy for Investment Promotion at the Ministry of Investment and Downstreaming/BKPM, Nurul Ichwan, the downsizing occurred because CATL obtained Outward Direct Investment (ODI) approval from the Chinese government, which then conducted an evaluation of CATL's projects in Indonesia and decided to scale back after concluding that demand for electric vehicles was not meeting expectations.
"Based on recent developments, demand for electric vehicles has not been as expected. So when analysed, the required capacity had not yet reached that level, and therefore a lower capacity was allocated," Nurul explained in Jakarta on Wednesday (23 April).
Nurul further explained that CATL's investment would be halved from the originally promised amount. "What was initially at a certain level has been reduced to half, and this needs to be recalculated," he added.
The downsizing would also affect economies of scale, including adjustments to raw materials, machinery and production land. "This reduction then raises questions about the economics — how many years to break even, what profits can be achieved, and so on, until eventually catching up to a certain volume, with potential additional investment to increase capacity," he concluded.
Previously, during a hearing with House of Representatives Commission XII on Monday (17 February), IBC President Director Toto Nugroho stated that CATL's initial investment value was US$1.18 billion, equivalent to Rp19.13 trillion (assuming an exchange rate of Rp16,213 per US dollar), alongside a production capacity of 15 gigawatt hours (GWh) per year. After obtaining ODI approval from its government, CATL subsequently cut its investment to US$417 million with a production capacity of 6.9 GW.
"The ODI approval we received from them (CATL) was only half — around 6.8 GW with US$417 million," Toto told the House.
The Dragon project refers to a collaboration between Indonesia, through PT Industri Baterai Indonesia or Industry Battery Corporation (IBC), and Chinese company Ningbo Contemporary Brunp Legend Co Ltd (CBL), a subsidiary of Contemporary Amperex Technology Co Ltd (CATL). On 16 October 2024, IBC formed a joint venture for battery cell manufacturing with CBL, aimed at boosting the EV battery industry in Indonesia.
According to Deputy for Investment Promotion at the Ministry of Investment and Downstreaming/BKPM, Nurul Ichwan, the downsizing occurred because CATL obtained Outward Direct Investment (ODI) approval from the Chinese government, which then conducted an evaluation of CATL's projects in Indonesia and decided to scale back after concluding that demand for electric vehicles was not meeting expectations.
"Based on recent developments, demand for electric vehicles has not been as expected. So when analysed, the required capacity had not yet reached that level, and therefore a lower capacity was allocated," Nurul explained in Jakarta on Wednesday (23 April).
Nurul further explained that CATL's investment would be halved from the originally promised amount. "What was initially at a certain level has been reduced to half, and this needs to be recalculated," he added.
The downsizing would also affect economies of scale, including adjustments to raw materials, machinery and production land. "This reduction then raises questions about the economics — how many years to break even, what profits can be achieved, and so on, until eventually catching up to a certain volume, with potential additional investment to increase capacity," he concluded.
Previously, during a hearing with House of Representatives Commission XII on Monday (17 February), IBC President Director Toto Nugroho stated that CATL's initial investment value was US$1.18 billion, equivalent to Rp19.13 trillion (assuming an exchange rate of Rp16,213 per US dollar), alongside a production capacity of 15 gigawatt hours (GWh) per year. After obtaining ODI approval from its government, CATL subsequently cut its investment to US$417 million with a production capacity of 6.9 GW.
"The ODI approval we received from them (CATL) was only half — around 6.8 GW with US$417 million," Toto told the House.