Many Indonesian publications took a dim view of the development, saying Jakarta had been “snubbed”, while The Jakarta Post said Indonesia’s window to become a major EV manufacturer was closing.

“Jetting across the world to convince would-be investors is a noble effort, but something may be lacking in Indonesia’s offer. We have the biggest economy in Southeast Asia, a growing consumer market, EV purchasing incentives and the world’s largest nickel reserves,” the newspaper said in an editorial on August 3. “Should global players not be scrambling to invest here?”

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Officials from Luhut’s ministry have spent the past week reassuring the public that Tesla’s new regional headquarters in Selangor was not a sign that Indonesia was being overlooked by Musk.

“Tesla’s investment in Malaysia is not [in the form of] an EV factory, but for sales and distribution, so we’re not too worried about that,” Septian Hario Seto, deputy for investment and mining coordination at the ministry, said on July 25. “What we are targeting are EV factories. For Malaysia, it only invests in distribution and charging networks.”

Indonesian officials have also made a few unsubstantiated claims to prove their efforts were not fruitless. Last August, Luhut claimed Tesla had agreed to purchase US$5 billion worth of Indonesian nickel produced by China’s Zhejiang Huayou Cobalt and CNGR Advanced Material. Tesla has never commented on this claim.

In February, Widodo said in an interview with Reuters that he was “confident” Tesla would invest, as the country had the world’s biggest nickel reserves at 21 million metric tonnes. Nickel is a key material in EV batteries.

“I said to [Musk] that if you invest in Indonesia, I will give concessions in nickel [mining],” Widodo had said. Tesla has not made any decisions to date.

Andry Satrio Nugroho, a researcher of industry, trade and investment at the Institute for Development of Economics and Finance in Jakarta, said nickel was not likely to be an attraction for Tesla.

“Tesla doesn’t use nickel-based batteries any more, so it will be difficult for Indonesia to get Tesla to set up an EV battery facility here,” he said. “One of the things that made Musk switch to [lithium iron phosphate] batteries was Indonesia’s ban of nickel ore export, which made nickel prices go up.”

LFP batteries do not contain nickel or cobalt, and are easier and cheaper to make, although they pack less energy density than nickel-based batteries.

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Nugroho said, however, that competition with Malaysia was not a zero-sum game. There was still room for Musk’s investments in Indonesia, namely for his aerospace company SpaceX and its subsidiary Starlink, which provides high-speed satellite internet to remote areas, he said.

“Indonesia already uses SpaceX services to launch its satellites. Jokowi also eventually needs to say that the country needs Starlink for the remote regions; it will be a win-win solution for Indonesia and Starlink,” he said, referring to Widodo’s popular nickname.

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SpaceX and Indonesia launch satellite to boost high-speed internet coverage in the country

SpaceX and Indonesia launch satellite to boost high-speed internet coverage in the country

‘Not serious’?

Apart from selling cars, Tesla is establishing a head office, service hub and experience centre in Malaysia’s Selangor, and will invest “significantly” in a network of fast-charging and regular-charging stations across the country.

He said “political stability” had brought Tesla to the nation of 33.9 million people. “When the unity government came about, there is political stability … When the political climate is stable, people are sure to come,” he said during a speech on July 28.

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According to Anwar, it was Musk who had contacted him for a meeting, after a previous request made by a former minister failed.

“Elon Musk is the richest person in the world. Elon Musk is richer than countries. It is quite difficult to bring him in. But once we became stable, I didn’t ask to talk to him; he asked to talk to me,” he said.

But analysts note that political stability is not the sole driver for Tesla’s investments in the region. Before Malaysia’s election last November, the country had three prime ministers in three years, and a unity government consisting of Anwar’s party and former foes was forged to calm divisions in the country. In comparison, Widodo has governed Indonesia since 2014, with his coalition making up more than 81 per cent of seats in parliament.

Indonesia, however, fares poorly in environmental social governance (ESG) aspects, a set of standards used by a company to screen potential investments, Nugroho of Indef said.

“There are still many issues that Indonesia has not complied with enough, especially the ESG aspects of its nickel mining sector. From there, maybe Tesla withdrew its intention to build [a manufacturing facility] here,” Nugroho said.

There have been reports in recent years detailing the harsh conditions faced by workers in Indonesia’s nickel-mining hub of Sulawesi, where many Chinese firms have set up shop, as well as the environmental damage caused by the operations of smelters, which are reliant on fossil fuels.

Daymas Arangga, executive director at Jakarta-based Energy Watch, said Jakarta was “not entirely focused and serious” in transitioning to renewable energy, as fossil fuels still accounted for 60 per cent of Indonesia’s energy supply. The lack of green energy may have reduced investor appetite, especially EV producers, to set up shop domestically, he said.