Indonesia’s strategic position in the global electric vehicle supply chain has continued to develop through 2025-26. The country’s nickel reserves, the ongoing investment in downstream processing, and the deliberate policy positioning to capture more of the EV battery value chain are producing visible results. The position in 2026 is more substantial than it was three years ago.

This is a working snapshot of Indonesia’s EV supply chain position as it sits in May 2026.

The nickel foundation

Indonesia’s nickel reserves and current production make the country one of the most important nickel-producing economies globally. The ore types found in Indonesia’s nickel deposits include both the limonite and saprolite ores used in EV battery manufacturing, particularly the high-pressure acid leaching (HPAL) processes that produce battery-grade nickel.

The headline production figures for Indonesian nickel through 2024-25 are substantial, with continued growth into 2026. The downstream processing investment has continued, with multiple smelter and refining facilities operating or under construction across Sulawesi, North Maluku, and several other regions.

The downstream policy

The Indonesian government’s downstream development policy — the broader Hilirisasi strategy — has continued to apply pressure for more of the nickel value chain to occur within Indonesia rather than as raw ore export. The export ban on raw nickel ore, implemented some years ago and now thoroughly embedded in industry expectations, has shaped the investment pattern that has produced the current downstream capacity.

The next phase of the downstream policy has focused on battery precursor materials and battery manufacturing itself. Several major battery and battery-precursor facilities have been announced or commenced operations in Indonesia, with investment from Chinese, Korean, and increasingly other international partners.

The international partnerships

The international partnership picture for Indonesia’s EV supply chain is varied. Chinese companies — particularly CATL, BYD, and several other major battery and EV groups — have been substantial investors in Indonesian processing and manufacturing operations. Korean companies including LG Energy Solution and Hyundai have major Indonesian investments. Several Japanese partners are involved. A growing number of European and North American partnerships have been announced through 2024-26.

The geopolitical context of these partnerships has continued to shape the discussion. The US Inflation Reduction Act provisions and similar policy frameworks in other markets have created complex eligibility considerations for Indonesian-processed materials in some specific contexts. The negotiations around these provisions, and the practical implications for investment decisions, are an active area in the 2026 industry conversation.

The battery manufacturing capacity

The battery manufacturing capacity in Indonesia has grown through 2024-26. Multiple battery cell manufacturing facilities have commenced operations, with capacity ramps continuing through the period. The capacity is not yet at the scale of the major Korean or Chinese battery manufacturers but is meaningful in the regional context.

The pack-level battery assembly capacity has also grown, with several local automotive groups partnering with international battery manufacturers to produce EV batteries within Indonesia. The integration of battery manufacturing with local automotive assembly has been a stated policy priority.

The EV manufacturing position

The EV manufacturing position within Indonesia has continued to develop. Several international automotive groups have announced or commenced EV manufacturing operations in Indonesia, with both passenger vehicles and commercial vehicle programs in the announced pipeline. The Indonesian government’s policy support for EV manufacturing has included specific incentives for local production and content sourcing.

The EV adoption picture within the Indonesian domestic market has grown but remains modest in absolute terms. The high upfront cost of EVs relative to internal combustion alternatives, the charging infrastructure development, and the broader consumer adoption patterns are all factors in the domestic adoption trajectory. The export market for Indonesian-made EVs has been a stated priority for the manufacturing investments.

The environmental and social considerations

The environmental and social considerations of the Indonesian EV supply chain development have been a continuing topic of international discussion. The environmental footprint of HPAL nickel processing, the deforestation implications of mining expansion, the social impacts on communities near mining and processing operations, and the broader sustainability of the supply chain are real considerations.

The Indonesian government and the major industry participants have stated commitments to addressing these considerations, with varying degrees of implementation progress. The international scrutiny of the Indonesian supply chain has been a meaningful factor in some specific commercial decisions, particularly for end-market manufacturers selling into markets with stringent supply chain disclosure requirements.

The longer-term sustainability of the supply chain is a real consideration that will shape the commercial position of Indonesian materials in the global market through the rest of the decade.

The infrastructure picture

The infrastructure picture supporting the EV supply chain has continued to develop. The Morowali Industrial Park in Sulawesi has been one of the more visible concentration points for nickel processing and downstream activity. Other industrial estates and Special Economic Zones have continued to develop. The supporting infrastructure — power generation, port capacity, road and rail networks — has been a focus of policy and investment attention.

The power generation question is significant. The energy intensity of nickel processing and battery manufacturing is substantial, and the Indonesian power generation mix is currently weighted toward coal. The implication for the carbon footprint of Indonesian-processed materials, and the longer-term trajectory of the power generation mix toward renewables, is an active strategic question with both environmental and commercial dimensions.

The competitive position

Indonesia’s competitive position in the global EV supply chain in 2026 is strong in the upstream and midstream segments and developing in the downstream segments. The dominant position in nickel processing is secure for the foreseeable future. The battery precursor and battery cell manufacturing capacity continues to grow. The EV manufacturing capacity is at an earlier stage but is moving in the intended direction.

The countries and regions competing for similar positions in the EV supply chain — including the Philippines for some nickel-related opportunities, several African nickel and cobalt producers, and the broader competition in battery and EV manufacturing — have not collectively displaced Indonesia from its strong position, though the competitive dynamic continues to be live.

The outlook

The outlook for Indonesia’s EV supply chain position is broadly positive through the remainder of 2026 and into 2027. The investment commitments are substantial. The policy framework supports continued downstream development. The international demand for EV battery materials and finished batteries continues to grow.

The risks to the trajectory are real but manageable. The environmental and social considerations require continued attention. The geopolitical context of supply chain partnerships will continue to evolve. The technology trajectory of EV batteries — particularly the prospect of solid-state batteries with different material requirements — is a longer-term consideration that does not change the near-term picture but could affect the longer-term position.

Indonesia’s strategic positioning in the EV supply chain has been one of the more consequential industrial policy initiatives in recent Indonesian economic history. The results in 2026 are substantial and the trajectory continues to be positive.