One Country’s Dream of EV-Driven Prosperity Helps Fuel a Coal Binge Instead

A few years ago, Indonesia set out to turn its treasure trove of nickel into an electric-car manufacturing boom.

It imposed a sweeping ban on the export of raw nickel. That meant that companies wanting to tap the world’s largest source of the mineral—used in the most powerful type of EV batteries—would have to build smelters in Indonesia. Officials bet that factories to make EV batteries and entire electric cars would also follow, spawning end-to-end supply chains close to the mineral bounty.

The smelters came, and Indonesia’s nickel industry witnessed explosive growth. But powering it is a coal binge that is throwing off the country’s climate goals. And Indonesians are still waiting for EV makers to lay down production lines.

As President Joko Widodo prepares to leave office this year after a decade—the most he can serve—he is exhorting his potential successors to stick with the policy that is at the centre of his economic legacy. Indonesia holds presidential elections on Feb. 14, and a new leader will take charge in October.

Widodo has cast his plan, referred to in economist-speak as downstreaming, as the answer to the question of how Indonesia will become a rich nation. He says the country is reversing a 400-year pattern dating back to colonial times of being exploited for its natural resources and getting little in return. He has prodded other developing nations to follow its lead.

Last year, officials escorted delegations from mineral-rich Papua New Guinea and the Democratic Republic of Congo to one of Indonesia’s largest nickel industrial parks to show them the scale of Indonesia’s achievements. New Chinese-built smelters dot the archipelago. The value of Indonesia’s nickel exports is up four times since 2019 to around $33 billion.

Not everyone believes the silver metal is a silver bullet.

Nickel smelters have led to a surge in coal use, with new coal plants coming up at a time when the world is trying to phase out the fossil fuel. A January report by Climate Rights International, a U.S. environmental group, said that a single nickel-focused industrial park located on eastern Indonesia’s Maluku islands will burn more coal than Spain or Brazil when it is fully operational.

“We are sacrificing the environment and society, while at the same time getting limited profits for the country,” Muhaimin Iskandar, a vice-presidential candidate in the coming election, said during a televised debate with his political opponents.

Other candidates have pledged to carry forward the president’s nickel policies, including the front-runner for president, Prabowo Subianto, who has said it is much better to export electric-vehicle batteries than raw nickel.

The “dirty nickel” reputation is threatening the very economic opportunities Indonesia covets. In October, nine U.S. senators signed a letter opposing a proposed free-trade agreement to source critical minerals from Indonesia, citing environmental and safety concerns. Without a free-trade deal, EV batteries with substantial quantities of Indonesia-processed nickel won’t be eligible for a major U.S. tax credit.

That makes the country’s nickel less attractive to Western EV makers, who are already battling questions from green groups about the environmental fallout of the country’s sprawling nickel operations.

In a sign of the growing unease, a deputy director for batteries and critical materials at the U.S. Energy Department, Ashley Zumwalt-Forbes, voiced concern in a LinkedIn post last month about what she called the grip of dirty Indonesian nickel on the market. Indonesia accounts for half the global nickel supply, up from a quarter in 2018.

The problems with nickel are also pushing EV makers to rework car batteries and go nickel-free. A lithium-iron-phosphate alternative is gaining traction, though it remains less powerful than batteries containing nickel.

Then there is the question of whether the policy is taking Indonesia toward Widodo’s goal of downstreaming—that is, a shift to higher-value manufacturing. Widodo has long said the endgame isn’t localising nickel processing but rather attracting EV and battery factories. Anything less, he says, could put Indonesia on the same track as some commodity-rich Latin American economies that have languished.

But so far, EV makers haven’t rushed into Indonesia. Tesla, which Widodo has assiduously courted, including on a 2022 trip to Texas to meet with founder Elon Musk, hasn’t shown any signs it plans to set up a factory in the country. No other Western automakers have built EV factories either, though General Motors has a stake in one China-based automaker producing electric cars in Indonesia. Some, like Ford, have made deals to tie up nickel supply.

Korean automaker Hyundai has since 2021 operated one of Indonesia’s only EV factories, focused on the domestic market. The unit can produce 150,000 vehicles a year, but made fewer than 9,500 in 2022 and 2023. Hyundai and Korea’s LG expect to begin producing battery cells at a plant in West Java this year.

Automakers generally look to set up battery and EV plants in the markets where people are already buying electric cars. That puts Indonesia, where few consumers have switched from combustion-engine vehicles, at a disadvantage. The country has a limited charging network and gasoline is heavily subsidised.

Indonesian policymakers who believe the country’s nickel bounty gives it leverage over carmakers are mistaken, said Tom Lembong, a former trade minister under Widodo. He pointed to the growth of nickel-free batteries as a warning against betting big on nickel.

Lembong, who is advising presidential candidate Anies Baswedan—whose ticket advocates focusing on promoting labor-intensive industries—said Indonesia has made limited progress moving up the value chain.

“The irony about this is they call it downstreaming, but we’re still very upstream,” he said.

Septian Hario Seto, a senior Indonesian official involved in nickel policymaking, acknowledged that EV battery and car factories have been slower to come than nickel smelters. The government has brought new regulations to address that, he said, such as one that makes it easier for EV makers to import cars into Indonesia on the condition they later build a factory.

Last month, Chinese EV giant BYD said it would begin car sales in Indonesia, and break ground on a manufacturing unit later this year.

Overall, Seto said the nickel policy has been successful, boosting economic growth in less-developed eastern regions where the nickel is found, and providing jobs and tax revenue. The government has taken steps to limit environmental degradation, such as by banning companies from jettisoning mining waste into the ocean, and will try to bring hydropower projects online as an alternative to coal, he said.

Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics in Washington, D.C., said there are two ways to assess Indonesia’s industrial policy.

“It’s been successful at driving foreign investment and building nickel processing capacity,” he said. “So far it hasn’t achieved the fully integrated mine-to-EV battery assembly to which it aspires.”

Reporting season has once again reminded investors that a strong profit does not guarantee a rising share price, and a large loss does not always trigger a sell-off. What matters most is how each result compares with expectations and, increasingly, what management says about the year ahead. During the August 2026 season, companies offering credible turnarounds or unexpectedly strong guidance were rewarded handsomely, while those flagging weaker margins, slowing demand or greater uncertainty were punished.

The following ranking draws on Morningstar’s review of 164 ASX-listed companies and measures each company’s share-price movement on the day it reported. This captures the market’s immediate response to the earnings announcement, before subsequent economic developments, dividends and company-specific news cloud the picture. Here are the five biggest winners, and the five hardest-hit losers, of the season so far.

The five winners

1. Bapcor (ASX:BAP): +41.0%

Bapcor delivered reporting season’s largest relief rally after presenting early evidence that its troubled automotive-parts business was stabilising. Although underlying revenue fell 1.8% to $1.92 billion and underlying NPAT collapsed 85% to $10.8 million, underlying EBITDA of $152.5 million exceeded guidance.

More importantly, working-capital initiatives released $68.5 million in the second half, lifting cash conversion to 109.4% and reducing net debt by 63% to $135 million. The statutory loss was $431.6 million, largely because of non-cash impairments. Investors focused on improving operational momentum, stronger liquidity and management’s expectation of modest FY27 revenue growth.

2. Zip Co (ASX:ZIP): +18.2%

Zip comfortably surpassed its FY26 targets, sending the buy-now-pay-later provider’s shares sharply higher. Transaction volume rose 23% to $16.7 billion, while cash earnings before tax, depreciation and amortisation jumped 58% to a record $268.9 million. Statutory profit climbed 46% to $116.4 million, and the cash operating margin expanded by 4.2 percentage points to 20%.

The strongest signal was guidance for FY27 cash earnings of $340 million—around 26% growth and above analysts’ forecasts. US transaction volume increased 42.5% and now represents three-quarters of group volume, offsetting weaker customer activity in Australia.

3. CSL (ASX:CSL): +17.3%

CSL’s result was hardly spectacular in isolation, but it cleared a market bar that had fallen dramatically following earlier downgrades and restructuring announcements. Underlying NPATA was US$3.1 billion, down 2% in constant-currency terms, while operating cash flow reached US$3.51 billion.

CSL maintained its full-year dividend at US$2.92 per share and completed a A$1 billion buyback. The real catalyst was FY27 guidance for approximately 5% underlying profit growth, compared with market expectations closer to 2%. After an extended period of earnings disappointments, investors interpreted the outlook as evidence that CSL’s core plasma business was approaching a sustainable recovery.

4. Judo Capital (ASX:JDO): +16.9%

Judo Capital demonstrated strong operating leverage as its specialist business-lending franchise expanded. Full-year profit before tax rose 34% to $168.1 million, while pre-provision profit increased 42%. Gross loans and advances grew 18% to $14.7 billion, reaching the top of the bank’s guidance range and comfortably exceeding broader system growth.

Deposits increased 24% to $12.2 billion, return on equity improved by 1.1 percentage points to 6.4%, and earnings per share rose 29% to 9.9 cents. Reaffirmation of the FY27 outlook gave investors confidence that loan growth could continue without sacrificing margins or credit quality.

5. Super Retail Group (ASX:SUL): +15.8%

The owner of Supercheap Auto, rebel, BCF and Macpac reported record sales of $4.2 billion, up 3.2%, despite cautious discretionary spending. Profitability went backwards: normalised profit before tax fell 7% to $306 million and normalised NPAT declined 2.8% to $226 million as transformation spending weighed on margins. Nevertheless, the result exceeded subdued expectations, online sales grew 5.3% and membership across the group’s loyalty programs reached 13.1 million. Investors were also encouraged by positive early FY27 trading, stable gross margins and continued market-share gains. A fully franked 33-cent final dividend added to the appeal.

The five losers

1. Hansen Technologies (ASX:HSN): –21.2%

Hansen’s historic result met expectations, but investors recoiled from its outlook. The utility and communications software provider achieved an underlying EBITDA margin of 31%, exceeding its 30% target, while generating strong cash flow. However, management designated FY27 an “investment and transition year”, signalling a roughly five-percentage-point margin contraction as spending on products, sales capabilities and organisational changes increased.

Revenue had already been broadly flat, leaving investors concerned that the investment program would depress earnings before new growth appeared. Leadership changes, including the chief executive’s departure, added uncertainty. Management expects revenue growth and margins above 30% to return in FY28, but the market was unwilling to wait.

2. Life360 (ASX:360): –19.4%

Life360’s headline growth was impressive: quarterly revenue rose 38% to US$159 million, subscription revenue increased 31%, and adjusted EBITDA climbed 53% to US$31.1 million. Monthly active users reached 102.4 million and paying circles grew 27% to 3.2 million. The sell-off reflected expectations rather than a collapsing business.

Net income fell 18%, the net margin contracted from 6% to 3%, hardware shipments dropped 18%, and full-year EBITDA guidance was merely maintained. After a strong valuation run, investors wanted a larger upgrade and clearer evidence that heavy investment in advertising, international expansion and artificial intelligence would generate additional earnings.

3. PEXA Group (ASX:PXA): –17.0%

PEXA reported a 7% increase in continuing-operations revenue and 12% EBITDA growth to $152 million, accompanied by a two-percentage-point margin expansion. Free cash flow increased 39%, suggesting the core Australian electronic-conveyancing platform remained highly profitable. Investors instead concentrated on management’s warning that property-transfer volumes could decline, alongside regulatory uncertainty surrounding the fees PEXA can charge.

The company is also continuing to invest heavily in its loss-making international expansion. Morningstar considered the market reaction excessive, arguing that structural transfer-volume assumptions had not materially changed, but the combination of softer near-term activity and regulatory risk overwhelmed the respectable headline numbers.

4. SEEK (ASX:SEK): –14.3%

SEEK produced solid FY26 figures, including 10% revenue growth to $1.20 billion, a 15% rise in EBITDA and 28% growth in adjusted earnings per share. It also lifted its fully franked annual dividend by 13% to a record 52 cents. Those achievements were overshadowed by falling paid job-ad volumes and cautious FY27 assumptions.

The statutory accounts included a $201 million loss from the SEEK Growth Fund and $377 million of significant items, making the headline result considerably less attractive. Investors were particularly concerned that economic weakness could limit volumes while the company continued investing in platform integration and artificial-intelligence products.

5. JB Hi-Fi (ASX:JBH): –12.3%

JB Hi-Fi’s full-year result was broadly respectable, with group sales rising 5% to $11.1 billion and underlying earnings per share increasing 6% to $4.48. The damage came from its current-trading update. Australian sales were almost flat during the June quarter and deteriorated further in July, while earnings in the core Australian electronics business fell 3.6%.

Housing-related categories were particularly weak as higher living costs and interest rates constrained household budgets. With JB Hi-Fi entering the season on a demanding valuation, an in-line historic result was not sufficient: the loss of sales momentum prompted investors to rapidly reduce their expectations for FY27.

Overall, the season showed that share prices react less to whether profits rose or fell than to the gap between results and expectations. Bapcor was rewarded for being less troubled than feared, while several fundamentally profitable companies were punished because their outlooks failed to justify elevated valuations.