Indonesia is building battery cells faster than it is writing the rules for retiring them

Indonesia Battery Corporation set out what the country's battery industry most needs at the Indonesia Energy and Engineering Series on 3 September 2026. Niko Chandra, Head of ID Battery and Business Development Director at IBC, named four things, and the list is more interesting for what is missing than for what exists.

The first is demand visibility. Chandra said what industry players need most is a clear view of how much battery demand will grow. The second is mandatory safety testing. Testing infrastructure and Indonesian national standards already exist, but the requirement to use them remains largely voluntary, which he argued needs strengthening to build public confidence in electric vehicles.

The third is recycling. Indonesia does not yet have comprehensive rules for it, and formal second life applications remain incomplete.

The manufacturing has arrived ahead of the framework

The timing of that gap is what makes it worth attention now rather than later.

Cell manufacturing at Karawang is designed for 6.9 gigawatt hours in its first phase, rising to 15 gigawatt hours with a second phase of 8.1, through PT Contemporary Amperex Technology Indonesia Battery, a venture of the CATL subsidiary CBL together with PT Antam and IBC. That is real industrial capacity producing cells for vehicles and for stationary storage.

Every one of those cells will eventually stop being useful in its first application. A country that manufactures batteries at that scale acquires an obligation that arrives roughly a decade later, and the decisions that determine how well it copes are taken now, while the fleet is young.

A battery plant is a waste stream with a ten year delay. The advantage Indonesia still holds is that the delay has not expired yet.

Chandra also pointed at where the demand is heading. Beyond electric vehicles and solar installations, he identified data centres as the largest emerging market for batteries, with Indonesia positioned as a regional hub. That matters for the recycling question too, because stationary storage is exactly where a vehicle battery goes when it is no longer fit for a car.

The rules are being written now

The Ministry of Environment has been preparing regulation for electric vehicle battery waste since at least the middle of the year. Speaking in Jakarta on 30 June 2026, the environment minister, named in reports as Jumhur Hidayat, said the ministry was preparing rules for managing this waste, expecting it to become visible in two or three years. He noted that battery reuse technology may allow 80 to 90 percent recovery before anything is finally disposed of, and framed waste as a solvable accompaniment to the energy transition rather than an argument against it.

A framework already exists to build on. Government Regulation 22 of 2021 and Ministerial Regulation 6 of 2021 govern hazardous and toxic waste, and under them battery waste from electric vehicles must be recycled or otherwise properly managed. The work now is in the specifics of collection, thresholds and responsibility rather than in establishing the principle.

The intended chain has been described in outline. Batteries are collected from dealers and workshops, passed to licensed collectors and on to recycling centres. Those retaining sufficient capacity are directed to second life use. What cannot be reused is recycled, and only what cannot be recovered at all goes to landfill. Government research is still determining the capacity threshold at which a battery qualifies for second life, weighing technical performance against health and environmental considerations.

Second life is the step that decides the economics

Evvy Kartini, founder of the National Battery Research Institute and a physicist working on materials, has set out why the intermediate stage matters.

When a battery falls to around 80 percent of its original capacity it is no longer satisfactory in a vehicle, where range and power matter. It remains entirely serviceable for stationary energy storage, where neither constraint applies in the same way. That second application can add roughly five years before recycling becomes necessary.

Her warning on timing is direct. The question of what happens when today's electric vehicles reach ten years old and need new batteries is one to plan for now, not to take up in a decade.

She also identifies a commercial asymmetry that policy will have to confront. Nickel manganese cobalt batteries are attractive to recycle because the recovered materials carry real value. Lithium iron phosphate batteries attract limited recycling interest in Indonesia at present, because what comes out is worth less. Left to the market, the first type gets recycled and the second accumulates.

That asymmetry matters more because lithium iron phosphate is the chemistry widely used in stationary storage, the segment growing fastest in Indonesia. The Karawang plant produces cells for vehicles and for battery energy storage systems alike. If the storage share of that output leans toward the chemistry with the least recycling interest, then the problem Indonesia faces a decade from now is growing precisely in the part of the market expanding quickest today.

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Three observations follow.

The first is that the regulation should be finished while it is still cheap to comply with. Extended producer responsibility, deposit arrangements and collection obligations are far easier to impose on an industry that is building its logistics now than on one that has already built them around a different assumption. The manufacturers currently establishing themselves in Indonesia are in a position to design collection into their networks if they are told to, and the cost of doing so at this stage is a fraction of retrofitting it later.

The second concerns the battery chemistries the market will not handle on its own. If lithium iron phosphate cells cannot be recycled profitably, they will be stockpiled or abandoned unless the rules require otherwise. A recycling obligation that applies to all chemistries, supported where necessary by a fee collected at sale, is the standard remedy. Kartini's proposal for collection depots under coordinating ministries addresses the same problem from the infrastructure side.

The third concerns joining the second life question to the storage requirement. Indonesia is planning battery storage at very large scale, including 3,300 megawatt hours in Bali alone alongside the national solar programme. Retired vehicle batteries at 80 percent capacity are a natural input to lower duty storage applications. Rules written so that second life batteries can be certified and connected, rather than treated as waste by default, would turn a disposal problem into a supply of cheap storage.

What to watch next is whether the environment ministry's regulation is completed within 2026 as targeted, whether the management ecosystem begins operating by 2027, and where the second life capacity threshold is eventually set.