NMC Battery Incentives Seen as Accelerator for Nickel Downstreaming

Project Coordinator ENTREV Eko Adji Buwono has assessed that the government’s plan to provide incentives for electric vehicles using nickel-manganese-cobalt (NMC) batteries could serve as an accelerator for national nickel downstreaming. The policy is considered important for strengthening the development of the nickel-based battery industry domestically while increasing the added value of Indonesia’s mineral resources.

The incentives are not only expected to drive electric vehicle sales. Policy support is also needed to strengthen demand for nickel-based batteries currently being developed through an industrial chain spanning mining, processing, and battery cell manufacturing.

“IBC [a member of the MIND ID Holding Group] is currently the only state-owned company mandated to build and develop the nickel-based battery industry. Without policy support that prioritises nickel-based batteries for domestic use, it will certainly be difficult to compete with lithium iron phosphate (LFP) batteries,” Eko said, as quoted on Thursday (27/8/2026).

According to him, policy alignment is a crucial factor so that investments already made in building the national battery ecosystem can develop optimally. Indonesia does not only need to possess large nickel reserves, but also must ensure that the mineral is absorbed into high-value downstream industries.

The development of the NMC-based battery ecosystem has begun to be built from upstream to downstream. Indonesia Battery Corporation (IBC), through the electric vehicle battery plant of PT Contemporary Amperex Technology Indonesia Battery (CATIB) in Karawang, has an initial production capacity of 6.9 GWh.

This capacity serves as one of the foundations for developing the national electric vehicle industry. As the electric vehicle market grows, battery demand is expected to be increasingly met from the supply chain built domestically.

“Various calculations have been made regarding the multiplier effects of downstreaming the battery industry. The most tangible are the increase in mineral added value, job creation, and the reduction of battery imports as well as fuel imports as electric vehicle usage rises,” Eko said.

The development of the national battery industry is also seen as having a broader impact on the economy. Nickel downstreaming not only produces goods with higher value compared to raw material exports, but also has the potential to attract investment and create jobs in the manufacturing sector.

Previously, Minister of Energy and Mineral Resources Bahlil Lahadalia stated that the government would prepare incentives for NMC battery-based electric vehicles. This is part of a strategy to strengthen the national electric vehicle ecosystem.

Bahlil believes that nickel-based electric vehicles need attention because Indonesia has abundant nickel resources and is building an NMC-based battery industry. These batteries are also considered to have advantages for vehicles with longer ranges compared to LFP batteries, although their production costs are relatively higher.

On the fiscal side, Finance Minister Purbaya Yudhi Sadewa previously revealed that the government is preparing electric vehicle incentives targeted to cover 100,000 electric cars and 100,000 electric motorcycles each this year. For electric motorcycles, the incentive prepared is Rp5 million per unit, while electric cars will receive a Government-Borne Value Added Tax (PPN DTP) scheme of 40 percent to 100 percent.

The government is also reviewing the provision of incentives based on the type of battery used, including differentiation between nickel-based and non-nickel electric vehicles. This scheme is expected not only to accelerate electric vehicle growth, but also to create a domestic market that supports the nickel-based battery industry.

With targeted incentives and policies, nickel downstreaming can move beyond mineral processing. An integrated supply chain extending to battery manufacturing presents an opportunity for Indonesia to accelerate its transformation from a raw material exporter into a producer of high-value-added products.