Hyundai, LG Energy break ground on $1.1 bn Indonesia battery plant

Hyundai Motor Co. and LG Energy Solution Ltd. have begun construction of a $1.1 billion battery cell plant in Indonesia as the two South Korean companies strive to gain ground in the fast-growing Southeast Asian electric vehicle market.

The construction of the plant located in Karawang New Industry City, near Jakarta, will be completed in the first half of 2023, Hyundai and LG said on Wednesday.

The factory will begin commercial production in the first half of 2024 with an annual capacity of 10 GWh of battery cells, enough for over 150,000 EVs.

Indonesian President Joko Widodo and other government officials attended the groundbreaking ceremony, while Hyundai Motor Group Chairman Chung Euisun, LG Energy Chief Executive Kim Jong-hyun and Hyundai Mobis Co. CEO Cho Sung-hwan joined the event online from Korea due to the pandemic.

“Starting with this plant, an EV ecosystem will be successfully established in Indonesia with the development of various related industries,” said Hyundai Chairman Chung. “Furthermore, we expect Indonesia to play a key role in the ASEAN EV market.”

In July, Hyundai and LG signed a memorandum of understanding with the Indonesian government to establish a joint venture in Indonesia to manufacture battery cells.

For the project, the two Korean companies agreed to invest a total of $1.1 billion in the 50-50 JV.

NCMA BATTERIES

The factory will produce NCMA (nickel, cobalt, manganese and aluminum) lithium-ion battery cells, which LG Energy is set to mass-produce from next year for the first time in the world.

NCMA battery cells are chemically more stable and richer in energy density compared to NCM battery cells, thus more expensive.

Indonesia has ample mineral resources such as nickel and cobalt, key raw materials for EV battery production. The Southeast Asian country is the world’s top nickel producer with the largest reserves.

“Today marks a significant step in starting a new era of the EV battery industry in Indonesia, with the establishment of its first battery cell manufacturing plant in the country,” said LG Energy CEO Kim.

“Through the joint venture partnership, we are now a step closer to establishing the world’s first comprehensive EV supply chain.”

HYUNDAI’S AUTO PLANT IN INDONESIA

The new battery cell factory is also close to Hyundai Motor’s car factory, currently under construction.

Hyundai Motor plans to complete the construction of its first Indonesian plant with a capacity of 150,000 units a year by the end of this year.

Hyundai said the battery cell plant will help it secure a stable supply of batteries for its electric cars to be sold in the Southeast Asian country.

The battery cell production capacity at the plant could expand to 30 GWh if necessary, according to Hyundai and LG.

The Indonesian government has said it will offer various incentives and rewards to support the stable operation of the battery cell plant.

Indonesia is a promising car market with about 1 million new units sold a year. The world’s fourth most populous country has strong growth potential as the ratio of car ownership to total population stands at less than 100 cars per 1,000 people.

Write to Hyung-Kyu Kim at khk@hankyung.com
In-Soo Nam edited this article.