Toyota is increasing its investments in Indonesia through bioethanol development and electric vehicle (EV) battery manufacturing, aligning its operations with the country's energy transition and industrial development plans.

The Japanese automotive manufacturer is aligning its Indonesian operations with the government's priorities under President-elect Prabowo Subianto, which include downstream industrialisation, energy self-sufficiency, and the development of localised supply chains for mobility and clean energy industries.

Toyota's recent initiatives reflect the company's "multi-pathway" approach towards carbon neutrality, combining alternative fuels such as bioethanol with electrification technologies rather than relying solely on battery electric vehicles.

Toyota expands bioethanol activities

One of Toyota's recent initiatives in Indonesia is its involvement in a bioethanol project in Lampung through Toyota Tsusho, alongside Pertamina New & Renewable Energy (PNRE), Danantara Investment Management, and Japanese technology partners including the RaBIT Consortium.

Construction of the project is expected to begin in the third quarter of 2026. Deputy Minister of Investment and Downstream Industry Todotua Pasaribu stated that the initiative had been under preparation for more than a year, with coordination continuing between Indonesian and Japanese stakeholders.

He said, "This programme has actually been running for about a year, but we developed it quietly. Currently, coordination between PNRE and Japanese groups is underway, with Toyota Tsusho designated as a partner and supported by other technology partners from Japan such as RaBIT."

Lampung was selected as the first development site due to its agricultural feedstock resources, including sugarcane, cassava, and sorghum, which are used as raw materials for bioethanol production. The project will be developed in phases, beginning with a pilot facility targeting annual production of 60 kilolitres by the third quarter of 2027, before expanding into commercial-scale production with annual capacity reaching 60,000 kilolitres by the fourth quarter of 2028.

Indonesia is also promoting a multi-feedstock strategy utilising biomass waste such as palm oil residues, corn, and sorghum, supported by second-generation (2G) biofuel technology aimed at improving supply flexibility and long-term sustainability.

Toyota's involvement in the sector comes as Indonesia accelerates its mandatory bioethanol blending roadmap, targeting E5 implementation in 2026-2027, increasing to E10 in 2028-2030, and progressing towards E20. Indonesia is also in discussions with Toyota Motor Asia regarding broader collaboration in bioethanol development. Government estimates referenced by the Ministry of Energy and Mineral Resources indicate that the country will require around 4 million kilolitres of bioethanol annually to support the E10 mandate by 2027, amid fuel consumption exceeding 40 million kilolitres per year.

Expanding EV battery localisation

Alongside its bioethanol initiatives, Toyota is also expanding its presence in Indonesia's EV battery industry through a partnership between Toyota Motor Manufacturing Indonesia (TMMIN) and Contemporary Amperex Technology.

The collaboration, announced during Toyota Indonesia's 55th anniversary celebration, includes investment worth approximately IDR 1.3 trillion (around US$ 80 million), aimed at expanding EV battery production capacity and localising battery components within Indonesia's domestic supply chain.

President Director of TMMIN Nandi Julyanto stated that the partnership forms part of Toyota's localisation strategy in Indonesia. He said, "Battery cell and module components that are currently imported will be produced by Indonesian talent. This partnership will not only expand investment but also support Toyota's multipathway approach toward carbon neutrality by strengthening the local supply chain."

Currently, Toyota operates a battery pack production line at its Karawang facility in West Java, supplying batteries for hybrid models including the Toyota Kijang Innova Zenix HEV, Toyota Veloz HEV, and Toyota Yaris Cross HEV. The company is targeting battery exports beginning in the second half of 2026, including both installed vehicle batteries and standalone battery components for overseas markets. Indonesia is also being prepared as one of Toyota's regional production hubs for hybrid vehicle batteries within its global manufacturing network.

Vice President Director of TMMIN Bob Azam stated that expanding battery manufacturing capabilities could support Indonesia's automotive sector while attracting additional supply chain investments.

He said, "Therefore, in addition to maintaining the existing supplier ecosystem, TMMIN is progressively enhancing capabilities and has the potential to attract new supply chain partners to support industrial transformation."

The localisation of battery cell and module production is expected to increase Indonesia's domestic content level (TKDN) from around 8% to more than 80%.

Toyota expands investments in Indonesia's energy transition

Toyota's investments across bioenergy and electrified vehicle production reflect the company's focus on Indonesia as a manufacturing and energy base for Southeast Asia. The dual investment strategy also reflects Toyota's position that future mobility solutions in emerging markets may involve multiple technologies operating in parallel, including hybrid vehicles, localised EV battery production, and combustion fuels such as bioethanol.

At the same time, demand for electrified vehicles in Indonesia continues to rise. Data from the Indonesian Automotive Industry Association (Gaikindo) showed that electrified vehicle sales increased by 71% in 2025 compared to the previous year, with hybrid electric vehicles contributing the largest share.

Despite the increase, industry observers noted that Indonesia still faces structural challenges in scaling its bioethanol industry, including feedstock efficiency, production costs, and the ability to achieve economies of scale comparable to major producers such as Brazil.

Toyota's expansion into bioethanol and battery localisation also reflects a broader shift in the company's Indonesia strategy, with the country increasingly serving as a production and development base within its future mobility operations.