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The Gap Between EV Factories and Real Industry in Indonesia
Chinese-owned EV factories in Indonesia run below 15% utilization. The IEA data shows assembly capacity without technological control. Jakarta needs an industrial capability scorecard.
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Indonesia has captured more than a fifth of Chinese carmakers' overseas manufacturing capacity for both combustion-engine and electric vehicles. The International Energy Agency estimates that utilization of Chinese-owned battery-electric capacity in the country stood below 15 percent in 2025.
That number needs unpacking. The IEA's measure includes mixed production lines and plants assembling imported knockdown kits. It is not a gauge of fully localized EV manufacturing. This is exactly why it matters: factory capacity reveals less about industrial depth than investment announcements usually imply.
A plant shows where a car is assembled. It does not show where the vehicle was designed, who wrote its software or who controls the most valuable technical decisions.
Indonesia has moved beyond simple vehicle imports. It now hosts assembly, battery-related manufacturing and a growing pipeline of active-material projects. Those investments create jobs, production experience and demand for suppliers. Physical integration does not automatically produce technological control.
That is not an argument against foreign investment. A foreign manufacturer that develops Indonesian suppliers, trains engineers and gives local teams responsibility for testing and product adaptation may create more capability than a nominally national brand built from imported platforms, batteries and software.
The better test is what Indonesian firms and workers are learning to do.
Progress should be measured by whether local suppliers move into motors, inverters, power electronics and thermal systems; whether Indonesian engineers take on calibration, diagnostics and software integration; and whether domestic companies enter regional or global manufacturing networks.
Current localization metrics answer these questions poorly. Investment values, announced capacity and domestic-content percentages all have a role. None reliably distinguishes an industry that is learning from one that is merely completing more stages of a foreign production process.
The same caution applies to knockdown assembly. The IEA notes that exports of semi- and completely knocked-down kits are growing because they allow manufacturers to begin local production before domestic supply chains can support fuller manufacturing. Such arrangements can train workers and give suppliers an entry point. Their value depends on whether local sourcing and engineering deepen over time. Otherwise, Indonesia may become efficient at assembling products whose technology, data and margins remain elsewhere.