A shift is taking place across China's electric vehicle (EV) supply chain, with potential implications for Indonesia's nickel-dependent EV industry.

BYD's new Datang SUV recently accumulated 150,000 pre-orders within 53 days in China, setting a pre-order record for a BYD model. All of these orders were secured without the use of nickel in the vehicle's battery.

For nearly a decade, the industry operated on the assumption that reducing range anxiety in long-range EVs required high-nickel ternary batteries. However, developments in China have led to increased scrutiny of that assumption.

The Datang's global rollout across Europe and Southeast Asia is not scheduled to begin until around the turn of the year. However, its reception in China has drawn attention to Indonesia's strategy of relying on nickel as a source of influence within the global EV supply chain.

A different type of flagship

The contrast between this launch and BYD's historical volume models reflects changes in the company's product positioning. More than a decade ago, the automaker relied heavily on its now-discontinued F3 compact sedan to achieve scale. The F3 retailed for approximately CNY 50,000 (US$ 6,900), requiring the company to operate on relatively low margins and high sales volumes.

The Datang occupies a different market position. Its price range extends from CNY 239,900 to CNY 309,900, equivalent to approximately US$ 36,000 to US$ 46,500. On that basis, a single Datang generates top-line revenue equivalent to five or six F3 vehicles.

Across the initial 150,000 pre-orders, the aggregate sales value is broadly comparable to that of approximately 900,000 entry-level vehicles. The vehicle uses a manganese-rich, nickel-free battery. Each Datang is powered by what BYD describes as its second-generation Blade Battery, which analysts believe, based on patent filings and its 3.8-volt platform, uses Lithium Manganese Iron Phosphate (LMFP) chemistry.

BYD has not officially confirmed the cathode material, and a regulatory filing for an earlier Blade 2.0 vehicle described a standard LFP battery pack. As a result, the battery chemistry remains subject to confirmation. Nevertheless, the formulation replaces nickel and cobalt with lithium, iron, phosphorus and manganese.

BYD rates the Datang's highest-specification battery pack at a CLTC range of 950 kilometres. In real-world conditions, its largest 130.15-kWh battery pack reportedly delivers a highway range exceeding 600 kilometres.

This development could affect Indonesia's nickel strategy. For several years, Indonesia has pursued a strategy resembling an OPEC-style mineral cartel, seeking to leverage its nickel reserves to increase its role in the global EV supply chain.

However, such strategies depend on continued demand, and Indonesia's efforts to expand its position within battery-material supply chains rely on a technical dependency that some manufacturers are attempting to reduce or eliminate.

Resource nationalism and policy volatility

Regulatory changes have affected several industrial investments in Indonesia. Chinese battery manufacturer CATL's integrated US$ 6 billion nickel mining, refining and battery-cell manufacturing complex was intended to support the country's downstream industrial strategy.

Throughout 2026, a series of policy measures affected investor confidence. These included mining-quota reductions, export levies, foreign-exchange retention requirements and policy reversals, all of which altered the investment environment for foreign capital.

Several major Chinese nickel smelters have reduced output, while planned capacity expansions have been postponed. Support for a nickel-centred industrial strategy has weakened, affecting investments from Japan's Sumitomo Metal Mining, LG Energy Solution and Singapore-based resource companies. With the Indonesian rupiah recently falling to more than 18,000 per US dollar, a credit ratings agency revised the country's sovereign credit outlook to negative, citing concerns regarding capital outflows.

Market analysis often treats these regulatory changes as temporary obstacles. However, Indonesia's policy volatility has coincided with technological changes within EV battery manufacturing. A common assumption within the industry is that solid-state batteries will increase nickel demand by replacing existing battery technologies. However, many advanced solid-state battery programmes continue to rely on high-nickel cathodes, modifying the electrolyte rather than the cathode chemistry.

A more immediate challenge to Indonesia's strategy is the commercial expansion of manganese-rich battery technologies such as LMFP. As demonstrated by the Datang launch, these chemistries can compete with high-nickel ternary batteries, including in premium vehicle segments.

Automakers are increasingly viewing nickel reduction as both a cost-management measure and a way to reduce exposure to geopolitical and supply-chain risks associated with resource-exporting countries. These technological changes affect several major investments. Within Southeast Asia's automotive markets, growth is expected in lower-cost battery technologies, including sodium-ion batteries and manganese-rich chemistries.

As a result, CATL's 15-gigawatt-hour high-nickel ternary battery facility remains dependent on export markets in Europe and North America. At the same time, automakers including BMW, Volkswagen and Volvo are diversifying battery sourcing and reducing exposure to Indonesian supply chains and environmental, social and governance (ESG) risks.

Geopolitical developments add further complexity. The United States' Foreign Entity of Concern rules and Inflation Reduction Act tax-credit provisions exclude Chinese-majority joint ventures from subsidy eligibility, weakening part of the export rationale behind CATL's Indonesian investment.

The investment timeline

The project faces timing-related challenges. With first-phase production delayed until late 2026 and full capacity not expected until 2031, the facility faces a limited commercial window. The Inflation Reduction Act subsidy framework is currently scheduled to expire in 2032, potentially leaving six years of subsidised operations. This is shorter than the eight-to-ten-year period that many large battery manufacturing facilities typically require to achieve investment payback.

As manganese-rich cathodes and sodium-ion batteries gain market share in China and other emerging markets, demand for specialised high-nickel battery cells faces increasing competition. Indonesia's mining sector generates more than US$ 32 billion annually in overseas revenue but remains concentrated in lower-margin downstream processing activities. Efforts to retain more value domestically have resulted in tighter regulations on foreign operators, affecting investment conditions.

Many battery-industry forecasts indicate that manganese-rich, nickel-free cathodes could account for a larger share of mainstream EV production before the end of the decade. BYD's second-generation LMFP platform is one example of this trend, with the Datang offering highway range comparable to conventional petrol vehicles without using nickel. As automakers continue reducing nickel content in battery designs, Indonesia's influence within battery-material supply chains could decline.

The limitations of a steel-market fallback

Some industry observers have suggested that Indonesia's Rotary Kiln Electric Furnace (RKEF) facilities could be converted from battery-grade nickel matte production to ferronickel (FeNi) or nickel pig iron (NPI) production for the stainless-steel industry.

However, such a shift would involve moving from battery materials to stainless-steel inputs, altering the original rationale behind many nickel-sector investments.

Western and Chinese steel producers continue to use regional nickel intermediates. According to a market research firm's report, stainless-steel production accounts for approximately 72% of global nickel demand.

However, this demand may not offset the effects of broader battery-market changes. BYD's second-generation LMFP Blade Battery is one example of a broader move towards nickel-free technologies. At the same time, sodium-ion and manganese-based batteries are continuing to expand their market presence.

For businesses, local governments and mining operators in regions such as Central Sulawesi and North Maluku, expectations regarding EV-related economic opportunities have become more constrained. The sector increasingly reflects the conditions of a competitive commodity-processing industry. Operational improvements at local RKEF facilities are unlikely to alter broader trends affecting demand for nickel-intensive battery technologies.

CATL's Indonesian investment

CATL's US$ 6 billion Indonesian nickel project is linked to Jakarta's objective of creating an OPEC (Organisation of the Petroleum Exporting Countries)-style nickel alliance. Reports of the collapse of a proposed Indonesia-Philippines nickel partnership due to differing commercial interests have reduced the likelihood of coordinated influence over global nickel markets.

Analysis by a market analysis firm found that Indonesia's mining-quota restrictions contributed to increased nickel production in the Philippines, Madagascar and several African countries, reducing Indonesia's influence over global supply. Indonesia continues to benefit from demand for low-grade nickel used in stainless-steel production. However, its objective of expanding its role in high-value EV battery materials faces increasing competition.

Resource-nationalist policies have also encouraged automakers and battery manufacturers to accelerate the development of nickel-free battery technologies. BYD's 150,000 domestic pre-orders for the nickel-free Datang indicate changing battery technology preferences within parts of the EV market.

The development highlights the extent to which technological changes and supply-chain diversification can affect commodity-based industrial strategies. Natural-resource wealth alone does not guarantee long-term economic influence. Long-term industrial competitiveness depends on a combination of resources, technological development, skills and innovation.