Indonesia is expanding its electric vehicle (EV) strategy beyond battery production, placing greater emphasis on recycling and waste management while utilising its mineral resources to develop an EV battery ecosystem.

Government officials outlined the country's plans during the Korea-Indonesia Economic Partnership Forum in Jakarta on June 24th, highlighting efforts to strengthen industrial downstreaming, attract investment, improve battery recycling capabilities and secure long-term supplies of critical minerals.

Building an EV battery ecosystem

Indonesia is seeking to expand its role in clean-energy supply chains, supported by its reserves of minerals used in EV battery production. Speaking at the forum, Ahmad Faisal Suralaga, Director of Downstreaming Strategy and Governance at the Ministry of Investment and Downstreaming, stated that Indonesia possesses four of the six primary materials required for EV battery manufacturing.

"Out of the six main materials needed to build EV batteries, four are found in abundance right here in Indonesia. We have nickel, bauxite, manganese and copper. They are important materials in the EV battery supply network," Suralaga said.

He stated that these mineral resources enable the development of downstream industries that process raw materials into battery components and finished electric vehicles. Indonesia is currently the world's largest nickel producer, accounting for 42% of global supply. In addition to nickel, the government has identified 28 other strategic commodities for value-added processing under its national downstreaming programme.

According to Suralaga, Indonesia aims to develop an industry spanning the entire value chain, from raw-material extraction to final battery packaging. The country intends to become one of the world's five largest EV battery producers by 2045.

"This is possible as downstreaming creates the highest additional value. For example, the added value of nickel could increase up to 67 times if we successfully convert it into EV batteries," he explained.

The government estimates that opportunities to develop a national EV battery ecosystem could attract approximately US$ 121 billion in investment. More broadly, ministry data indicate that Indonesia's long-term downstreaming strategy could generate total investment of US$ 618 billion, increase export value to US$ 857 billion and create more than 3 million jobs.

A localised downstream ecosystem is also expected to reduce costs associated with fragmented global supply chains, including export duties, foreign taxes and international logistics expenses. Several global EV battery manufacturers have already entered Indonesia to participate in the ecosystem.

Currently, investment remains concentrated in the mineral sector at approximately IDR 98.3 trillion (US$ 6.18 billion). The plantation and forestry sector account for IDR 29.8 trillion, followed by oil and gas at IDR 17.6 trillion and the maritime sector at IDR 1.7 trillion.

Growing focus on battery recycling and waste management

Alongside battery production, Indonesia is increasing its focus on recycling and waste management as EV adoption accelerates and concerns grow regarding future volumes of battery waste. The management of used batteries has become an increasing priority as the country develops downstream industries linked to its mineral resources and seeks to address long-term waste-management requirements.

"This is a pressing issue because our focus is not only industrial development, but also how battery waste is managed," said Atong Soekirman, Assistant Deputy for Metal, Machinery, Transportation Equipment, Electronics and Miscellaneous Industries at the Coordinating Ministry for Economic Affairs.

Under Indonesia's 2025-2029 National Medium-Term Development Plan, electric vehicles are a component of industrial downstreaming efforts aimed at increasing the value of domestic natural resources.

Indonesia's EV market has continued to expand, with sales reaching approximately 103,000 units in 2025. Lithium iron phosphate (LFP) batteries dominated Indonesia's electric-car market in 2024, accounting for approximately 96% of usage, while nickel-manganese batteries represented around 4%.

The growth of electric vehicles is expected to generate increasing volumes of electronic waste and retired batteries in the coming years. Battery lifespans generally range from eight to 12 years, creating a growing need for collection, reuse and recycling systems.

According to Atong, Indonesia must strengthen waste-management systems as more battery-powered vehicles enter the market and eventually reach the end of their operational lives. Effective battery management will also help maintain supplies of critical materials required by the industry. He further added that waste-management policies could help Indonesia establish industry benchmarks and provide a reference point for other developing economies.

Circular economy becomes central to policy

Government officials stated that Indonesia has begun transitioning towards a circular-economy model to address challenges associated with battery production and EV growth. According to Suralaga, the global EV battery industry faces several challenges, including mineral availability, decarbonisation requirements and concerns regarding resource management.

"To achieve sustainability, the Indonesian government has enacted a policy that goes beyond simply extracting resources for battery production; we are now moving toward recycling," he said.

As global electrification and renewable-energy adoption accelerate, batteries have become increasingly important for industrial activity, energy systems and economic development. However, higher battery production and usage also create challenges related to resource efficiency, waste management and environmental sustainability.

Suralaga stated that Indonesia has introduced regulations supporting companies involved in battery recycling and intends to align these measures with internationally recognised frameworks. According to him, battery recycling can support Indonesia's participation in global battery supply chains by enabling an ecosystem ranging from raw-material preparation to end-product manufacturing and eventual recycling.

A circular-economy framework is viewed by policymakers as a mechanism for managing EV batteries throughout their lifecycle. Similar approaches have already been adopted in markets including Japan, South Korea and Singapore.

Technology transfer and cooperation with international partners are expected to support these efforts. Circular-economy practices focused on recovering valuable minerals from used batteries could help maintain future raw-material supplies while supporting product development and manufacturing activities.

Policymakers stated that recycling systems and waste-management frameworks are likely to become increasingly important as global battery demand continues to rise. Worldwide demand for EV batteries is projected to increase from approximately one terawatt-hour in 2024 to around three terawatt-hours by 2030. Indonesia considers regulations, coordinated management systems and recycling infrastructure necessary for the development of a battery industry capable of supporting long-term EV growth.

Regulatory reforms and international cooperation

To support the development of the EV battery ecosystem, Indonesia is implementing business-policy reforms designed to reduce investment risks and simplify administrative processes. Suralaga stated that the government has shifted its focus from exporting raw materials to producing higher-value products through industrial downstreaming. Indonesia is also introducing integrated systems and single-window clearance mechanisms to streamline investment procedures.

"We are also considering international regulations, such as the EU Battery Passport, which has been implemented in several countries. In the future, perhaps we can discuss how Indonesia can align with these international standards," he remarked.

He also invited South Korean investors to contribute technologies that support the circular economy and assist in the development of Indonesia's supply chain, including nickel extraction, battery production and battery recycling facilities.

Government officials stated that the combination of downstream industrial development, recycling capabilities, regulatory reforms and international partnerships could support the development of Indonesia's EV battery industry while addressing long-term sustainability objectives.