Indonesia says investment talks with Tesla still ongoing

Negotiations between Indonesia and Tesla (TSLA.O) are still ongoing, a senior minister said on Thursday, following a report that the U.S. automaker is nearing a preliminary deal to build production facilities with a capacity of one million units.

Luhut Pandjaitan, who has been leading the talks with Tesla, declined to disclose further details, citing a non-disclosure agreement.

Bloomberg News also reported that the Indonesia talks include plans for production facilities and to facilitate the company’s supply chain, citing people familiar with the matter.

“I can’t comment, we’re still talking,” Luhut told Reuters, adding that he had just recently held another round of talks with Tesla.

Tesla did not respond to a request for comment.

Chief Executive Elon Musk tweeted on Wednesday, “Please be cautious about writing articles citing ‘unnamed sources’, as they are frequently false,” in a comment on a tweet referencing the report.

Indonesia, the world’s fourth most populous country, has long courted the U.S. company to build facilities to produce electric vehicle (EV) batteries and electric cars. President Joko Widodo met with Musk to discuss a potential deal last year.

Indonesia’s nickel ore can be processed for use in EV batteries and the country is keen to develop a downstream industry at home leveraging its rich nickel reserves, after banning ore exports since 2020.

Musk last month said Tesla was close to picking the location of its new “Gigafactory” following media reports that it could announce a new factory in the northern Mexican state of Nuevo Leon as soon as December.

Tesla currently makes its electric cars in China’s Shanghai, Germany’s Berlin, and Austin and Fremont in the United States.

Meanwhile, Indonesia has managed to attract other automakers to invest in EV production.

Hyundai Motor Co (005380.KS) and SGMW Motor Indonesia, part of a joint venture of SAIC Motor Corp Ltd (600104.SS), General Motors Co (GM.N) and Wuling Motors Holdings (0305.HK) have built assembly facilities in the Southeast Asian country.

Indonesian authorities have said Japanese firms Toyota Motor Corp (7203.T) and Mitsubishi Motors Corp (7211.T) have pledged investments in EV production.

Companies that have invested or expressed interest in investing in EV battery making include South Korean’s LG Energy Solution (373220.KS), China’s Contemporary Amperex Technology (300750.SZ), Taiwan’s Foxconn (2317.TW) and Germany’s BASF, Indonesia’s investment ministry said.

Jakarta plans to incentivise EV purchases to make them more affordable this year and encourage sales, government officials have said.


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