Indonesia's electric vehicle (EV) industry is expected to be affected by the recently signed comprehensive trade agreement with Canada, which may allow the country to import lithium for battery production.

The trade agreement, a comprehensive economic partnership agreement (CEPA), was signed by President Prabowo Subianto following his international visit.

Reported to span 9,000 pages, the CEPA includes major tariff eliminations. Trade Ministry Director-General Djatmiko Bris Witjaksono stated on 29th September 2025 that the agreement contains a chapter on "critical mineral dialogue."

Djatmiko explained that the dialogue establishes a framework for cooperation in critical minerals under the CEPA and is intended to cover the entire value chain, from raw materials to finished goods, although discussions are at an initial stage.

The dialogue may include the possibility of Indonesia importing Canadian lithium, a component essential for EV battery production.

Canada holds significant lithium reserves, while Indonesia does not. Both countries have nickel reserves, with Indonesia's 55 million metric tons exceeding Canada's 2.2 million metric tons.

The initial phase of the partnership will focus on identifying mutual needs, gaps, and feasible projects.

Djatmiko stated that the CEPA facilitates these discussions and that businesses should utilise the opportunities it provides.

Indonesia is developing its EV ecosystem to utilise natural resources and attract foreign investment. In early 2025, construction began on a US$ 5.9 billion EV battery manufacturing facility in Karawang, supported by China's CATL.

Under the agreement, Canada will remove 90.5% of import taxes on Indonesian goods, while Indonesia will liberalise up to 85.8% of trade with Canadian products.

Trade Minister Budi Santoso stated that the agreement could double current bilateral trade, with 2024 figures reaching US$ 3.5 billion, and that ratification is expected by mid-2026.

The ratification process will require both countries' legislatures to convert the CEPA into a legally binding instrument.