Ford has partnered with PT Vale Indonesia and China’s Zhejiang Huayou Cobalt in a $4.5 billion nickel processing plant deal in Indonesia. This development marks Ford’s first investment in Southeast Asia.

The investment highlights the growing demand among automakers for the raw materials needed to produce the batteries that make up about 40% of an EV’s sticker price in an effort to reduce costs and catch up to EV market leader Tesla.

The proposed high-pressure acid leaching (HPAL) plant will be based in Pomalaa in Southeast Sulawesi, where Vale operates a nickel mine. The plant’s development was started by Vale and Huayou in November, and commercial operation is anticipated to begin in 2026. The plant is expected to produce 120,000 tonnes per year of mixed hydroxide precipitate, a material extracted from nickel ore for use in EV batteries.

According to Febriany Eddy, CEO of Vale Indonesia, Vale owns 30% of the project, with Ford and Huayou holding the remaining 70%.

“Ford can help ensure that the nickel that we use in electric vehicle batteries is mined, produced within the same ESG standards as part of our business around the world,” stated Christopher Smith, Ford’s chief government affairs officer.

With the largest nickel reserves in the world, Indonesia has been working to develop downstream industries for the metal and eventually produce electric vehicles and batteries. To ensure supply for current and future investors, the Indonesia’s government has prohibited the export of unprocessed nickel ore since 2020. At the same time, it is actively courting foreign EV manufacturers like Tesla and China’s BYD Group to invest in the nation.

Other carmakers have been securing their raw materials future as well such as Volkswagen – the largest manufacturer in Europe – announced last month that it would invest 180 billion euros ($196 billion) over five years in sectors including battery manufacturing and raw material sourcing.