Tesla Choose India Instead Of Indonesia To Build Electric Car Factory, INDEF: Taxes There Are Cheap

JAKARTA - Electric car manufacturer owned by Elon Musk Tesla Inc. chose India as his second production base in Asia. Currently, Tesla is nearing the final stages of reaching an agreement to produce electric cars in South India, Karnataka.

If this agreement between Elon Musk and the Government of India is successful, then Tesla will have three production bases for electric cars, namely in the United States, China, and India.

The news that Tesla will build a factory in India has raised questions about the fate of negotiations with the Indonesian government. Because previously, Tesla had sent a proposal for investment interest to the government through the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan.

Deputy for Investment and Mining Coordination at the Coordinating Ministry for Maritime Affairs and Investment, Septian Hario Seto finally commented, although he was reluctant to elaborate further.

"I'm sorry there is a nondisclosure agreement (an agreement that cannot be disclosed to the public). Nothing can be disclosed," he said when contacted by VOI, in Jakarta, Thursday, February 18.

Unfortunately, Seto's statement above did not answer whether Tesla's investment plan in Indonesia was canceled, with the news that the electric car company owned by Elon Musk chose India for the production of electric cars.

So what makes India more attractive than Indonesia for investment?

Director of the Institute for Development of Economics and Finance (INDEF), Tauhid Ahmad said there are several things that make India more attractive to become an investment destination country than Indonesia.

1. India offers cheap taxes for foreign investors

Tauhid said India has a cheap tax policy to attract investment into the country. Meanwhile, in Indonesia, there is no such policy. Moreover, Tesla also has collaborations with Indian companies based in Amsterdam.

"India has a tax regime that is more friendly to foreign investors. So India can offer cheaper taxes. I think this is the first thing I will get if Tesla (builds a factory) in India", he said when contacted by VOI, Thursday, 18 February.

2. Having experts in many fields

Tauhid said India does have a large market. However, according to him, this is also owned by Indonesia. However, India has many experts in various fields that are far more than Indonesia.

"India has experts related to information technology, experts in the field of electric cars, it does have far more experts than us. I see this (reason) India has a greater chance (to attract Tesla to invest). Even though we have raw materials and so on", he explained.

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Even though Indonesia has the raw materials for making electric cars, India offers something different than Indonesia. Tauhid said this is the reason why Elon Musk chose India.

3. India's economy is recovering faster from COVID-19

Tauhid explained that like other countries, India's economy was also affected by the COVID-19 pandemic. However, the recovery or economic recovery is faster than in Indonesia.

"I think that's the record. The projection of 7 percent growth in 2021 is the best. Because now the decline in COVID-19 is much faster than ours. Even though their COVID-19 number is higher", he said.

Tesla is not interested in building a battery factory in Indonesia

Previously, the President Director of PT Pertamina (Persero) Nicke Widyawati revealed that Tesla wanted to develop an energy storage system (ESS).

"Tesla is interested in energy storage, not in electric vehicle batteries", she said at a hearing with Commission VII, Tuesday, February 9.

Nicke said that Tesla's interest in developing domestic ESS was due to a plan to increase the number of Solar Power Plants (PLTS) en masse in Indonesia. With the increasingly massive PLTS, the electricity supply to ESS will be more reliable, so it is considered to be an attractive business for Tesla.

"Tesla came to Indonesia to see the potential to maintain the reliability of supply from PLTS is ESS, this is a big market", she said.

This is in line with what was conveyed by Septian Hario Seto, on February 5. He said that the investment plan proposal offered by Tesla was different from other potential partners, namely a company from China, CATL, and a company from South Korea, LG. He said this difference was because the basic technology used by Tesla was different from the two other companies.

According to Seto, Tesla is likely to invest in the energy storage system (ESS) sector. This ESS is like a 'powerbank' with large-scale gigantic batteries that can store up to tens of megawatts of electric power, even up to 100 MW for stabilizers or as a replacement as a peaker generator (peak load support).

Furthermore, Seto explained, at night when the electricity consumption of the community is high, this can take advantage of this ESS. In addition, Tesla said that Indonesia which is an archipelago has the potential to combine new and renewable energy with this ESS technology.

"They told us that from the demand side with other countries it is already very high, but the supply of ESS is not much. If they want to cooperate with Indonesia with an archipelagic country with potential EBT, they can combine ESS technology in Indonesia", said Seto.

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