Tesla in Talks to Set Up Plant in Indonesia: Report

Tesla is close to inking a preliminary deal to build a car plant in Indonesia, the company’s third outside the home market in the US. The new car plant aims to produce around 1 million Tesla cars per year, Bloomberg reported.

Tesla is in Talks to Build Plant in Indonesia

Tesla is on the verge of agreeing on a deal to establish a car plant in Indonesia, Bloomberg reported on Wednesday. The move comes as a part of the company’s plan to capitalize on Indonesia’s national reserves of key battery metals.

The new factory would have a production capacity of around 1 million cars annually, aligning with Tesla’s aspirations to have all its plants produce reach that annual target. Elon Musk’s carmaker is also holding talks over other facilities in the country, which would serve to achieve different goals across its production and supply chain operations.

Bahlil Lahadalia, Indonesia’s investment minister, said the negotiations with Tesla are being led by the country’s ministry for maritime affairs and investment. However, no agreement has been signed yet, and there are no guarantees that the two parties will come to terms.

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The preliminary deal follows a nickel supply agreement between Tesla and Indonesia. The automaker signed contracts worth around $5 billion to purchase materials for their batteries from nickel processing companies in the Southeast Asian nation.

Bloomberg’s earlier reports revealed that Indonesia President Joko Widodo wants Tesla to produce cars in the country instead of just batteries.

A new plant in Indonesia would mark Tesla’s third factory outside the US, joining its gigafactories in China and Germany. But Indonesia is not considered a very attractive market among global car manufacturers, given that most of the country’s auto sales are made up of cheaper cars.

Last month, the EV giant said it plans to extend its production cuts at its Shanghai factory in January. The new schedule showed that the Shanghai plant would operate for just 17 days this month and shut down production from Jan. 20 to Jan. 31. for an extended break for the Chinese New Year.

Tesla’s shares rose more than 2.7% in premarket trading Wednesday following the reports of a potential deal. The stock currently trades at a steep discount after the company cut production targets and lowered its Q4 deliveries in China due to a recent surge in coronavirus cases. The stock’s decline has worsened even further since Musk bought Twitter in October 2022, with the billionaire facing criticism from investors over his role at the social media company.

How well do you think Tesla will perform in the Indonesian market in terms of sales? Let us know in the comments below.