Tesla is close to a deal to build factory in Indonesia

Image: Tesla

Tesla is close to signing a preliminary agreement to build a factory in Indonesia, according to an agency report. According to the report, the factory will be designed for an annual production of one million electric cars. However, the decision for construction has not fallen yet.

And even if Tesla were to sign the document, it would probably be a declaration of intent – a final deal would still have to be negotiated. The key data that Bloomberg has learned from insiders, however, are impressive.

In addition to the aforementioned production capacity of one million vehicles in the country (which should be roughly equivalent to Giga Shanghai), the construction of further Tesla facilities in the country for parts of the production and supply chain is probably part of the talks. However, according to the report, there is still a possibility that the deal could fall through.

If the negotiations are successful, it would be the fifth Tesla vehicle plant overall and the third outside the US. Which models Tesla wants to build in Indonesia and which markets could be served from there is not known at the moment.

However, the Bloomberg information does not come as a complete surprise: as early as May 2022, Indonesia’s investment minister had reportedly expressed confidence that Tesla would make investments in the country. Elon Musk agreed to the construction of a plant in the province of Central Java after a meeting with Indonesia’s President Joko Widodo. In August 2022, a senior Indonesian cabinet minister said Tesla had signed contracts worth around five billion US dollars to buy materials for its batteries from nickel-processing companies in Indonesia.

Low-cost access to nickel from Indonesian mining is likely to be one of the main reasons behind Tesla’s consideration of a plant in the Southeast Asian state. Indonesia has not yet emerged as an important sales market for Teslas – the majority of vehicles sold in the country cost 20,000 dollars or less, according to Bloomberg.

However, the background to the considerations has not been confirmed, as neither Musk himself nor Tesla officials responded to an enquiry from Bloomberg. The Indonesian Minister of Investment told the agency that the talks with Tesla were being led by the Ministry of Maritime Affairs – this ministry did not respond to a Bloomberg enquiry.

bloomberg.com (Paywall), twitter.com