Indonesia’s nickel surplus could power metals industry, not just EVs, says report
It suggests that even with a million EVs produced a year by 2035, Indonesia would still use under 1% of its nickel output
[JAKARTA] Indonesia should pivot to a “dual-track” industrial strategy that supports both electric vehicle (EV) development and the expansion of metallurgical industries, given that new research shows EVs will use up only a fraction of the country’s surging nickel output in the next decade.
A report released on Wednesday (Nov 26) by the Asia-focused energy finance think-tank Energy Shift Institute (ESI) said that while EV-related industries often dominate headlines and attract high-profile foreign investors, metallurgical uses of nickel – such as stainless steel, plating and nickel alloys – are far more scalable and better aligned with Indonesia’s existing industrial strengths.
These sectors absorb significantly more nickel, face fewer export barriers than cars or batteries, and offer deeper opportunities for developing the country’s small and medium-sized enterprises (SMEs).
The ESI report said: “Indonesia simply produces more nickel than its domestic EV sector will ever need. A dual-track strategy that builds both EV adoption and metallurgical industries will ensure more resilient long-term growth.”
Indonesia, already the world’s second-largest producer of stainless steel, exported 4.7 million tonnes in 2024.
Yet, it also imported US$44.2 billion in stainless steel end-products, including tubes, screws, cookware and industrial components. This imbalance highlights a missed opportunity, ESI noted.
“Nurturing local manufacturing clusters around stainless-steel and other metals could create more jobs, build domestic brands and deliver broader economic spillovers than the EV push.”
South-east Asia’s largest economy has been promoting its EV ecosystem to drive growth, capitalising on its position as the world’s largest nickel producer.
However, EV adoption in Indonesia still lags, making up under 5 per cent of the country’s 168 million vehicles on the road.
ESI estimated that even if Indonesia produces a million EVs a year by 2035 and expands the use of nickel-heavy nickel manganese cobalt (NMC) batteries, the sector would still consume under 1 per cent of the country’s 2024 nickel output.
By contrast, metallurgical uses could absorb up to 60 per cent of Indonesia’s nickel output by 2035, or more than a million tonnes a year.
EV market reality
The findings challenge a key assumption behind Indonesia’s industrialisation strategy – that nickel-driven downstreaming will automatically create a thriving domestic EV ecosystem.
ESI highlighted that global car production is largely regional; only 3 per cent of light vehicles are traded across continents, limiting Indonesia’s potential as a major EV exporter.
Battery manufacturing trends further complicate the picture. Cheaper lithium-iron-phosphate (LFP) batteries, which contain no nickel, now dominate EV sales in China and South-east Asia, undermining the rationale for policies promoting nickel-heavy NMC batteries.
ESI’s base-case scenario projected that if Indonesia develops nickel downstream into construction materials, household appliances and electronics, domestic nickel consumption could hit 900,000 tonnes annually, up from 400,000 tonnes in 2024.
In a best-case scenario, Indonesia could capture part of China’s market share, boosting domestic nickel consumption to 1.5 million tonnes annually, or around 64 per cent of last year’s mine output.
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