Indonesia Battery Market Outlook to 2028

Indonesia Battery Market Overview

• The Indonesia Battery Market reached a valuation of USD 199.85 billion in 2023, driven by the increasing demand for electric vehicles (EVs), renewable energy storage solutions, and significant investments in battery manufacturing facilities. This growth is bolstered by Indonesias strategic focus on becoming a global hub for battery production, particularly for EVs, leveraging its abundant natural resources such as nickel.
• Major players in the Indonesia Battery Market include PT Panasonic Gobel Energy Indonesia, PT GS Battery, PT Nipress Tbk, PT Tridinamika Jaya Instrument, and PT Yuasa Battery Indonesia. These companies dominate the market due to their extensive manufacturing capabilities, strong distribution networks, and continuous innovation in battery technology. Their strategic partnerships and investments in expanding production capacity have further solidified their market leadership.
• The key cities dominating the Indonesia Battery Market are Jakarta, Surabaya, and Bandung. Jakarta, being the capital, is the hub for industrial activities, including automotive and electronics manufacturing, which drives substantial battery demand. Surabaya and Bandung are also significant due to their growing industrial sectors and increasing adoption of renewable energy systems, making them critical regions for market expansion.
• In 2023, Indonesia signed an agreement with LG Energy Solution for a USD 1.1 billion investment in an electric vehicle battery plant in Karawang. This plant is part of Indonesia's broader strategy to become a global leader in EV battery manufacturing, capitalizing on its vast nickel reserves. The facility is expected to significantly boost local production capacity, with the potential to produce batteries for both domestic use and export by 2025.

Indonesia Battery Market Segmentation

The Indonesia Battery Market can be segmented based on the following factors:

• By Battery Type: The Indonesia Battery Market is segmented by battery type into lead-acid batteries, lithium-ion batteries, and nickel-metal hydride batteries. In 2023, lithium-ion batteries dominated the market due to their extensive use in electric vehicles and renewable energy storage systems. The ongoing shift towards sustainable energy solutions has reinforced the dominance of lithium-ion batteries in the market.

• By Application: The Indonesia Battery Market is segmented by application into automotive batteries, industrial batteries, and consumer electronics batteries. Automotive batteries dominated the market in 2023 due to the rising adoption of electric vehicles, driven by government support for the EV industry. The automotive sectors shift towards electrification has resulted in significant demand for automotive batteries, making it the dominant application segment.

• By Region: The Indonesia Battery Market is segmented by region into North, South, East, and West Indonesia. In 2023, West Indonesia dominated the market, primarily due to the high concentration of industrial activities and major urban centers like Jakarta. The region's advanced infrastructure and higher purchasing power have contributed to its market dominance.

Indonesia Battery Market Competitive Landscape

• PT Tridinamika Jaya Instrument: PT Tridinamika Jaya Instrument has entered into a collaboration with Kalibrasi.com, a digital platform that provides a wide range of calibration services and products. This partnership is designed to improve Tridinamika's ability to deliver high-quality calibration solutions, thereby meeting the diverse needs of its customers more efficiently.
• PT Nipress Tbk: PT Nipress Tbk is investing 35 billion rupiah (0.3 billion yen) to build an 8,000 sq. m. plant within its Karawang facility to manufacture high-value-added motorcycle batteries. This development is part of the company's strategy to diversify its product offerings in response to evolving consumer preferences in the Indonesian motorcycle battery market. The announcement of this investment and expansion was made in 2023.

Indonesia Battery Industry Analysis

Indonesia Battery Market Growth Drivers:

• Electric Vehicle (EV) Adoption: The rapid adoption of electric vehicles, supported by government incentives and infrastructure development, is a major growth driver. With over 70,000 EVs sold in the first half of 2024, the demand for batteries, particularly lithium-ion, is set to increase significantly.
• Renewable Energy Expansion: Indonesia's push for renewable energy, with a 12.5 GW capacity in 2024, has increased the demand for energy storage solutions. Batteries are crucial for storing renewable energy, ensuring a stable power supply, and driving market growth.
• Investment in Battery Manufacturing: Significant foreign and domestic investments, totaling USD 9.8 billion in 2023, are driving the expansion of battery manufacturing facilities. These investments are crucial for scaling up production to meet both domestic and global demand.

Indonesia Battery Market Challenges:

• Supply Chain Disruptions: The Indonesia Battery Market faces significant challenges due to supply chain disruptions. In 2024, the Ministry of Trade reported that battery manufacturers experienced a 20% delay in obtaining raw materials, such as nickel and cobalt, due to geopolitical tensions and export restrictions. These disruptions have led to production slowdowns and increased costs, impacting the timely delivery of batteries to key industries like automotive and renewable energy.
• Environmental and Regulatory Hurdles: Environmental regulations and compliance issues pose challenges to the battery industry in Indonesia. The governments stricter environmental policies, introduced in 2023, require battery manufacturers to adhere to new waste management and recycling standards, adding to operational costs. For instance, companies now face fines up to IDR 1 billion for non-compliance with the "2023 Battery Waste Management Regulation."

Indonesia Battery Market Government Initiatives:

• Battery Regulation and Development Roadmap (2023): In 2023, the Indonesian government introduced the Battery Regulation and Development Roadmap, focusing on increasing local content in battery production to 40% by 2025. The roadmap includes incentives for companies that invest in battery recycling and raw material processing. The policy is expected to attract over USD 2 billion in investments by 2024.
• Indonesia Clean Energy Initiative (2024): Announced in 2024, the Indonesia Clean Energy Initiative aims to increase the share of renewable energy in the national grid to 30% by 2030. As part of this initiative, the government allocated IDR 10 trillion for the development of battery storage systems to support renewable energy projects. The initiative also includes funding for research into next-generation battery technologies, positioning Indonesia as a leader in the global energy transition.

Indonesia Battery Market Future Outlook

The Indonesia Battery Market is projected to experience significant growth by 2028, driven by the continued adoption of electric vehicles, expansion of renewable energy projects, and substantial investments in battery manufacturing. The government's strategic initiatives and favorable regulatory environment will further boost market expansion.

Future Market Trends:

• Technological Advancements in Battery Manufacturing: Over the next five years, Indonesia is expected to witness significant technological advancements in battery manufacturing, particularly in the development of solid-state batteries. These batteries, known for their higher energy density and safety, are likely to gain traction as companies invest in R&D to stay competitive. The integration of AI and automation in battery production processes will further enhance efficiency and reduce costs, making Indonesian batteries more competitive in the global market.
• Expansion of Battery Recycling Facilities: As the demand for batteries increases, so will the need for sustainable practices. By 2028, Indonesia is expected to establish a robust network of battery recycling facilities to manage the growing volume of used batteries. These facilities will focus on recovering valuable materials like lithium, cobalt, and nickel, reducing the dependency on raw material imports. The governments focus on circular economy practices will drive investments in recycling technologies, making it a key area of growth in the battery industry.