Ahmad Zuhdi D.K., Ian Hiscock and Preet Kumar | November 2025
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EVs and batteries lead the headlines, but metallurgical applications are more scalable with greater scope to encourage SME inclusion and consumer-led green pathways.
Key Takeaways
In the next ten years, electric vehicles (EVs) and batteries produced in Indonesia will not consume more than 1% of its current domestic nickel production even if battery manufacturing reaches the equivalent of 1 million EVs per annum and policy support for nickel-manganese-cobalt (NMC) batteries is aggressive.
By contrast, metallurgical uses of nickel such as stainless steel, nickel alloys and plating could absorb up to 60% of Indonesian nickel capacity, serving diverse industries such as consumer goods, electronics, transport and construction that face far fewer export constraints than cars and batteries.
Calls to channel meaningful volumes of nickel into EV batteries overlook developments in lithium-iron-phosphate (LFP) technology as a safer and cheaper substitute as well as the sheer scale of Indonesian nickel production capacity. Export growth remains uncertain, with just 3% of global car sales traded across regions. Meanwhile, EVs in ASEAN markets are shifting toward LFP batteries.
The government should pursue a dual-track strategy that supports both EV adoption and metallurgical uses of metals to ensure resilient long-term growth. Policies should refocus on homegrown manufacturing businesses, stronger Small and Medium Enterprises (SME) inclusion and greener industrial development.
Executive Summary
In recent years, downstream policy in Indonesia has focused on electric vehicles (EVs) and batteries. Meanwhile, simple manufactured and semi-finished goods of all kinds, such as household appliances, consumer goods, components and parts, have been overlooked.
While less glamorous than large foreign investments in batteries and EVs, industries based around metallurgical applications of nickel are able to absorb much larger volumes of the mineral given their overall sectoral size, growing domestic markets and global export model. By contrast, the scope for EVs and EV battery production in Indonesia to absorb domestic nickel production is constrained by domestic demand and trends in battery technology.
To illustrate, the Energy Shift Institute examines two scenarios. In the first scenario, Indonesia achieves annual EV production of 500,000 by 2035 and expands nickel-manganese-cobalt (NMC) battery market share from 5% to 50%. The nickel consumed by EVs in 2035 would be just 9,600 tonnes, 0.4% of Indonesia’s 2024 nickel production. Under the second scenario, we assume Indonesia can export much larger volumes of EVs and EV batteries in addition to domestic demand. However, even at a production rate equivalent to 1 million EVs per year, this still absorbs only 0.8% of Indonesia’s 2024 nickel production. By contrast, metallurgical applications for nickel could absorb anywhere between 40%-60% of Indonesia’s 2024 nickel production by 2035 or more than 1 million tonnes of nickel per annum.
Energy Shift’s research finds that 97% of global cars are assembled in the country or region where they are consumed, due to regulations, tariffs and other trade barriers. Whilst there is still uncertainty about the long-term business model for EV-battery manufacturing, it will probably follow a regional model given the need for closed-loop recycling.
This will act as a significant constraint on exports and makes it unlikely that Indonesia can convert more than a few percent of its nickel into EVs or EV-batteries, especially given that lithium-iron-phosphate (LFP) batteries will be more suitable for ASEAN markets.
Considering the slow build-out of domestic nickel battery manufacturing, well-intentioned policy plans to mandate nickel-based battery chemistries in EV production is a risky move. The Indonesian government could inadvertently take on the fiscal burden of promoting NMC batteries, which are more expensive and less safe than LFP. Instead, the government should consider decoupling its mineral-based downstream sector from batteries and EVs, and place more emphasis on developing an ecosystem of manufacturing businesses centred around metallurgical applications for nickel – industries connected to stainless steel, nickel alloys and plating.
These uses provide greater opportunities for the development of homegrown small and medium enterprises (SMEs) and the building of foundational manufacturing capabilities. Industrial policy that supports homegrown manufacturing businesses clustered around metallurgical applications, as opposed to the more glamorous EVs and batteries, will have a bigger impact on economic growth, job creation and responsible supply-chains.
Thousands of metal-intensive end-uses can be found across consumer goods, electronics, and vehicle and industrial sectors, many of which align closely with Indonesia’s existing industries and competitive advantages. These sectors are supported by “invisible middle industries” that make metal-intensive components and parts, most of which Indonesia now imports.
In addition to nickel, these businesses also consume large volumes of copper, aluminium, steel and tin – all of which are produced domestically. Advancing these industries alone could raise the government’s current account by tens of billions of US dollars. Moreover, metals have well-established recycling economics with 95% of stainless steel currently recycled compared with just 5% of lithium-ion batteries.
In the absence of a global carbon tax, low-carbon, responsible supply-chains must be consumer-led. This starts small. As the Chinese economy switches to higher value-added manufacturing and services, Indonesia has an opportunity to build its own homegrown brands as well as manufacturing under licence from existing brands. This begins with simple consumer goods making the most of a large labour pool, rapidly growing domestic markets and geopolitical tensions between China and the West.
Some of these brands will naturally find opportunities in consumer segments that prefer responsibly sourced products. Once established, these brands will need more low-carbon materials that are produced to high environmental standards. The global metals industry is ruthlessly competitive – only by creating demand and product differentiation will the industry be able to move away from its singular focus of cost minimisation.
Indonesia is seemingly hesitant to act boldly in raising its environmental, social and governance (ESG) bar, fearing it would upset EV investments that never really arrived. But EVs can switch to LFP batteries – metallurgical uses cannot. The world may continue to shift away from nickel-based batteries. Products relating to metallurgical applications of nickel are a much more diverse and scalable opportunity that could create consistent, long-term demand for Indonesian nickel. A dual-track approach that develops both EV-battery and non-EV pathways could unlock stronger and more resilient economic growth and create meaningful opportunities to raise ESG standards.
This paper is part of a series of analyses on Indonesia’s downstream mineral and industrial development. The Energy Shift Institute is publishing this series to highlight key developments, challenges and opportunities in the sector.
Ahmad Zuhdi Dwi Kusuma is an Associate Principal of the Energy Shift Institute. Zuhdi is a development economist specialising in the mining and energy sectors. He previously spent four years as a mining industry analyst at Bank Mandiri.
Ian Hiscock is a Principal of the Energy Shift Institute. Ian is a mineral economist with a global profile. He started his career in London, spending more than 16 years working for companies, banks and governments all over the world.
Preet Kumar is a contributor to the Energy Shift Institute. Preet is a metals and mining analyst with experience spanning finance, consulting and engineering. He holds a mining engineering degree from IIT Dhanbad and an MBA from Singapore’s NTU.
The Energy Shift Institute is an independent non-profit energy finance think-tank driving context, clarity
and credibility for Asia’s energy transition pathways.