Indonesia is positioned at the centre of Southeast Asia's electric vehicle (EV) industry, driven by increasing demand, investment in local manufacturing, and its nickel reserves.

Southeast Asia is becoming a significant player in the EV sector. Alongside growth in EV sales and market potential, the region has attracted investment in battery and component manufacturing, establishing itself as a hub in the global supply chain.

Governments across the region have implemented policies to support the adoption of electric vehicles and meet climate objectives. The EV transition has also prompted discussion on trade-offs involving environmental, social, and economic factors.

Electric vehicles affect the environment, public health, and energy security. Compared to petrol-powered vehicles, EVs generate less noise pollution, which is relevant in densely populated urban areas. EVs produce zero tailpipe emissions, reducing pollutants such as nitrogen oxides, sulphur dioxide, and other particulate matter.

EVs do not emit carbon dioxide (CO₂) during operation, and their lifetime carbon emissions - including those from manufacturing and recycling - are lower than those of petrol vehicles. As transportation contributes to global CO₂ emissions, EV adoption can reduce carbon footprints and assist countries in meeting climate targets.

A transition to EVs also enhances energy security and resilience against fuel supply disruptions, which is significant in Southeast Asia, where many countries rely on imported oil.

China has become a major partner in Southeast Asia's EV adoption, with Chinese EV brands gaining market share and establishing local production facilities.

For Chinese manufacturers, the region is important due to its resources, policy incentives, and domestic market potential. Chinese EVs provide relatively affordable vehicles, create employment opportunities, and integrate the region into the global EV supply chain.

Zhang Yongwei, Vice Chairman of China EV100, a Chinese think tank focused on the EV industry, stated:

"Countries around the world have set goals for transportation transition, and the shift to green and clean new energy has become an urgent priority. No single country or company can dominate the entire EV sector. International cooperation is the prevailing trend. The entire ecosystem of electric vehicles - from research and development (R&D) and manufacturing to usage and services - requires openness and collaboration. Therefore, advancing coordination and harmonisation of policies and standards among nations is of great importance."

EV production presents trade-offs, particularly in relation to nickel extraction, a critical component of EV batteries.

Indonesia's nickel sector illustrates these challenges. The country holds the world's largest nickel reserves, representing a significant portion of global supply. With global demand for nickel rising, the International Energy Agency (IEA) projects Indonesia will supply a substantial share of the world's needs by 2030.

Chinese-backed projects dominate Indonesia's nickel sector, with Chinese firms controlling most of the country's nickel refining capacity. The prominence of Chinese companies in Indonesia's nickel industry and the regional EV market has raised concerns regarding supply chain control and industrial dependence. Analysts have questioned whether Indonesia has sufficient domestic capacity to develop its EV industry independently.

"If there is no technology transfer between the two countries, and Indonesia only receives manufacturing without acquiring knowledge of electric vehicle design, battery technology, and related areas, then we will always remain a market country, not a strategic partner," said Tauhid Ahmad, Senior Economist at the Institute for Development of Economics and Finance.

As Chinese EV brands continue to dominate Southeast Asian markets, concerns have arisen that local EV industry development could be limited. Evvy Kartini, a battery technology expert at Indonesia's National Battery Research Institute, stated:

"If all the technology comes from abroad, we will only be labourers in our own country."

Some experts note that technology transfer may occur over time. Xu Haidong, Deputy Secretary-General of the China Association of Automobile Manufacturers, told Chinese state-owned media that as China's EV ecosystem integrates with Southeast Asia, it could allow local automotive industries to adopt new technologies at lower cost and improve competitiveness.