Antara, Jakarta – A recent executive order by US President Donald Trump rolling back electric vehicle (EV) mandates is likely to disrupt Indonesia's burgeoning EV ecosystem, according to the Center of Economic and Law Studies (Celios).
The policy could significantly impact demand for critical minerals, foreign investment, and global financing for green energy projects, while strengthening China's grip on Indonesia's nickel downstream industry.
Bhima Yudhistira, Executive Director of Celios, said reduced global demand for EV batteries could pressure prices for commodities such as nickel, copper, and bauxite – key components in EV manufacturing.
"Nickel prices have already dropped 3.7 percent year-on-year, while cobalt has plummeted 16.6 percent over the same period," Bhima said on Tuesday. He warned that further price declines could prompt US automakers to reconsider their raw material supply contracts, potentially disrupting Indonesia's mining sector.
Trump's rollback of EV incentives under the Inflation Reduction Act (IRA) could deter US companies from investing in Indonesian nickel smelters and battery plants. Bhima said the IRA previously raised hopes for improved governance in Indonesia's downstream mining sector.
"With this policy reversal, the prospect of US investment looks increasingly dim, which could hinder Indonesia's ambitions to become a global EV hub," he said.
Risks to international financing for energy transition
Trump's decision also risks undermining international financing for clean energy projects, including Indonesia's Just Energy Transition Partnership (JETP). The $20 billion initiative aims to decarbonize Indonesia's energy and mineral sectors but could lose momentum if the US shifts its focus away from electrification and climate commitments.
"Without strong U.S. support, global partnerships for Indonesia's energy transition could falter, threatening the development of domestic EV components," Bhima added.
As US interest wanes, China's dominance in Indonesia's nickel industry is poised to grow. Bhima said China's economic slowdown has already depressed prices for processed nickel, including stainless steel components produced in Indonesia.
"Processed nickel exports are expected to decline further this year, potentially reducing Indonesia's trade surplus," he warned.
Trump's executive order, signed shortly after his inauguration on Jan. 20, repeals EV mandates introduced under the Biden administration. Labeling the previous policy a "mandate," Trump argued it stifled economic growth and innovation.
The order also loosens vehicle emission standards and halts funding for EV charging infrastructure. Trump declared a national energy emergency, enabling companies to operate with fewer environmental restrictions.
These moves underscore Trump's intention to prioritize traditional energy sources and gasoline-powered vehicles, even at the expense of global efforts to combat climate change.