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Thu, 30 Jan 2025 18:02 | Green Industrial | Editorial INTI
Jakarta, INTI – As reported by katadata.co.id, U.S. President-elect Donald Trump has introduced a new policy regarding the electric vehicle (EV) industry, which is starkly contrasts with the policies of his predecessor, Joe Biden.
One of the most controversial changes is the termination of incentives for electric vehicles in the United States, which were previously implemented to encourage the adoption of environmentally friendly transportation. This decision has sparked various reactions from automotive industry players, environmental groups, and the public, who have long supported the transition to clean energy.
Although many parties regret this decision, analysts believe that this policy will not completely halt the shift to electric vehicles but will merely slow down the transition to a renewable energy-based mobility era.
Despite the policy change, the global electric vehicle industry remains strong. Over the past few years, the EV industry has experienced rapid growth, with significant investments from global automotive companies.
Moreover, the increasing awareness of the importance of reducing carbon emissions and the ongoing implementation of green energy policies in various countries remain major driving factors for this industry. Thus, while Trump's policy may pose new challenges for the EV sector in the U.S., the transition to electric vehicles is likely to continue, fueled by technological innovations and rising market demand.
What are the implications for Indonesia?
The Indonesian government's policy under President Joko Widodo prioritize the downstreaming of the mining industry, particularly for strategic minerals such as nickel, cobalt, tin, and bauxite.
This program aims to increase the added value of Indonesia's natural resources by encouraging domestic processing of raw materials prior to export. However, the new policy announced by Donald Trump, which terminates incentives for electric vehicles (EVs) in the United States, has a direct impact on Indonesia, which is currently one of the main suppliers of EV battery raw materials.
One of the most significant impacts is the potential decline in global demand for critical minerals, such as nickel and cobalt, which are key components in EV battery production.
The removal of incentives for EVs in the U.S. could slow down the growth of the EV market, reducing interest from U.S. investors in Indonesia’s battery and smelter industries. This situation is further compounded by the potential disruption of international financing for EV-related projects in Indonesia.
As reported by Antara News on January 30, 2025, this situation could also lead to the domination of Indonesia’s nickel downstream industry by Chinese companies, which continue to aggressively invest in the global EV supply chain.
Additionally, the prices of key mining commodities such as nickel, copper, tin, and bauxite are expected to decline significantly.
In an interview with Antara News, Excecutive Director of Celios, Bhima Yudhistira, stated that the international benchmark price for nickel has already dropped by 3.7% year-on-year, while cobalt has fallen even more sharply by 16.6% in the same period.
He further predicted that in the next two months, the decline in raw material prices could worsen, posing a risk of altering business plans for EV companies in the U.S. and triggering changes in raw material supply contracts, which would inevitably affect Indonesia directly.
Furthermore, the investment prospects for U.S. companies in Indonesia’s nickel smelter and battery manufacturing sectors are also shrinking. Previously, the Inflation Reduction Act (IRA) gave hope that U.S. investors would play a role in Indonesia’s mining downstream sector.
However, with the policy shift under the Trump administration, U.S. investors are now expected to be more cautious in investing, leading to a further decline in Indonesia's processed nickel exports.
Bhima Yudhistira also warned that this year’s processed nickel exports are projected to decline further, which will ultimately impact Indonesia's trade surplus.
Overall, Donald Trump’s decision to end EV incentives creates a significant domino effect on Indonesia’s mining and downstream industries.
The declining global demand for EVs will directly impact the demand for EV battery raw materials, which in turn will affect Indonesia's mining sector.
As a key supplier of EV raw materials, Indonesia will likely have to rely more on partnerships with Chinese companies, which continue to dominate the industry.
Additionally, the prices of EV raw materials supplied by Indonesia are expected to keep falling, potentially impacting the sustainability of the domestic mining and downstream sectors.
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