Building a competitive advantage for Indonesia in the development of the regional EV battery chain

Abstract

In the process of the electrification of the vehicle industry, an important issue is to adapt production to new technological solutions and to achieve a break-even point in the production costs of an electric vehicle in the short term compared to its traditional counterparts. By the end of 2020, 10 million electric cars were sold worldwide. In today’s globalized and crisis market realities, it is very difficult for state authorities to build a competitive advantage. Based on the concept of M.E. Porter, generating competitiveness does not take place at the macroeconomic, but at the mezzoeconomic level. The key purposes of this review paper are threefold: firstly, to identify the infrastructure for the production of electric cars (market size, resources) in some major Asian countries, including Indonesia; secondly, to identify the importance of FDI for Indonesia and the essence of their relations with China, and thirdly, to investigate whether Indonesia is able to build a competitive advantage in the form of a regional EV battery chain hub. The Indonesian government should ensure a more sizeable investment in lithium-ion battery production in order to complete a whole downstream supply chain, which includes the synthesis of the remaining high-quality battery materials.