Contemporary Amperex Technology (CATL), a major Chinese battery maker, is scaling back its investment in Indonesia's electric vehicle battery (EVB) project by reducing both funding and estimated capacity due to weak global demand and shifting market projections.

Despite this reduction, the government maintains that its battery industry roadmap remains on track.

"The current demand for electric vehicle batteries has not reached the level anticipated in the original projections. It is only logical to reassess global capacity based on that," said Nurul Ichwan, investment promotion undersecretary at the Investment and Downstream Ministry, on 23rd April, 2025. "We have just gone through a period of re-evaluation, and the new numbers look promising," he further added.

Ichwan explained that the project had been adjusted following a review by the Chinese government, which approves and regulates outbound investments under its outward direct investment (ODI) scheme.

He stated that the project was still part of Beijing's strategic outward push but had been scaled to better align with current market dynamics and expected returns. "With the reduced capacity, we are also reassessing the economic scale: how many years it will take to recover the investment and what kind of profit margin can be expected," Ichwan said, noting that talks with CATL to finalise the revised figures were ongoing.

"There is still potential for additional investment later on, if the market picks up," he further added. The project involves the construction of a battery cell manufacturing plant in Karawang, West Java, through a joint venture between CBL International Development, a CATL subsidiary, and state-owned Indonesia Battery Corporation (IBC).

Announced in October 2024, the project originally called for an initial US$ 1.2 billion investment for an annual production capacity of 15 gigawatt-hours (GWh) in battery cells.

However, Beijing's latest ODI approval has reduced this to US$ 417 million for 6.9 GWh, cutting both funding and capacity by more than half, according to IBC president director Toto Nugroho.

Nugroho told lawmakers recently that ongoing talks with CATL aim to resolve the investment shortfall, with Indonesia seeking a firm offtake agreement to secure future battery demand.

The country is developing an integrated electric vehicle supply chain and aims to become one of the world's top three EVB producers by 2027 by leveraging its abundance of natural resources, particularly nickel, to establish an end-to-end domestic EV market.

Several domestic companies are building smelters to process nickel ore into battery materials.

By 2030, Indonesia aims to reach a national production capacity of 140 GWh per year, which could account for up to 9% of global demand.

Dozens of battery-related development projects are ongoing, mainly in nickel-rich Sulawesi and North Maluku, including projects led by CATL and South Korea's LG Energy Solution.

In a statement, LG announced its withdrawal from the "Indonesia Grand Package" project, which includes investments across the broader EVB supply chain, citing concerns over market conditions and the investment climate.