Toyota Spending $2 Billion to Develop Electric Cars in Indonesia

Having recently announced plans to “popularize” battery electric vehicles, Toyota now expects half of its global volume to stem from electrified cars by 2025. That’s five years sooner than originally promised.

Toyota may seem perpetually averse to change but it has been making a lot of moves behind the scenes to ensure it’s at the forefront of a shifting market while also trying to future proof itself in the event that electrification winds up being a dead end. The plan is rather complex and, as I don’t want to re-write a 900-word article, I would like to redirect you to the relevant information.

However, as nuanced as Toyota’s overall strategy may be, the company is still going to need to spend truckloads of cash to remain in the game. With that in mind, the Japanese automaker appears to be investing $2 billion to develop electric vehicles in Indonesia over the next four years — with hybrids being first on the docket.

Although it wasn’t Toyota that broke the news; Reuters got the skinny from Indonesia’s Coordinating Minister for Maritime Affairs Luhut Pandjaitan. According to a press release, Pandjaitan and Toyota president Akio Toyoda just shook on the deal in Osaka.

“From 2019 to 2023, we will progressively increase our investment to 28.3 trillion rupiah ($2 billion),” Toyoda was quoted as saying in the release, adding that Indonesia’s preexisting commitments to EV development made it an obvious candidate for investment.

We imagine Toyota’s current business relationships within the country and its fast-growing automotive sector also played a factor. Indonesia has been aggressively increasing production capacity over the last few years and is eager to have manufacturers move in and take advantage of its burgeoning industrial abilities and access to raw materials.

From Reuters:

Indonesia, the region’s largest economy, has plentiful reserves of nickel laterite ore, a vital ingredient in the lithium-ion batteries used to power EVs, and has been making a push to attract foreign carmakers.

Officials are betting Indonesia, which is already Southeast Asia’s second-largest car production hub, can become a major regional player in lithium battery production and feed the fast-rising demand for EVs.

The country announced earlier in 2019 plans to introduce a fiscal scheme that will offer tax cuts to EV battery producers and automakers, as well as preferential tariff agreements with other countries that have a high EV demand.

Last year, Mitsubishi said it wanted to work with Indonesia to examine whether or not the country has a good spot to build electric vehicles. In December, Hyundai Motor Co. went one better and announced it was already planning on producing EV inside the country and would be moving some assembly out of China as a result.

We’ll be waiting on Toyota to see what the full scope of this $2-billion injection entails. Thus far, the company has made no official comment on the matter and the release only specifies the sizable investment will advance “gradually through the development of hybrid vehicles.”

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