Hyundai and LG form new JV to build a battery plant in Indonesia – RM4.6 bil investment; operational in 2024

Hyundai Motor Group (HMG) recently announced that it has partnered up with LG Energy Solution to secure a stable supply of battery cells for electric vehicle production. Both companies also revealed that they have signed a memorandum of understanding (MoU) with the Indonesian government to establish a joint venture (JV) to manufacture battery cells in the country.

In an official release, HMG stated each company will own a 50% stake in the JV and the Indonesian government has already agreed to offer various incentives and rewards to support the stable operation of the plant.

Under the MoU, both companies will invest a total of USD1.1 billion (around RM4.6 billion) into the JV to build a battery cell plant on a 330,000-square-metre parcel of land in Karawang, close to the capital of Jakarta. Construction of the new facility is scheduled to take place in the fourth quarter of 2021 and is expected to be completed by the first half of 2023.

Following this, mass production of NCMA (nickel, cobalt, manganese, aluminum) lithium-ion battery cells will commence in the first half of 2024. The plant is said to have an annual capacity of 10 GWh, which is enough for over 150,000 EVs based on HMG’s E-GMP architecture, including the Hyundai Ioniq 5 as well as the Kia EV6.

The Indonesian government has made it clear that it wants to establish a robust EV industry in order to play a pivotal role in the global EV push. The republic is attractive to companies as it is the world’s biggest producer of nickel, which is a crucial ingredient in EV batteries.

More than that, the country is courting companies to invest in its EV industry with tax breaks and tax holidays, the latter if they invest at least five trillion rupiah (around RM1.5 billion). This has worked, as Hyundai previously said it will invest USD880 million (around RM3.7 billion) to produce EVs in the country in sometime in 2022.

Toyota also threw its hat into the ring, promising 28 trillion rupiah (around RM8.2 billion) to introduce no less than 10 EVs, although plug-in hybrids will be the first to roll off assembly lines by 2022. Not to be outdone, Thailand also has its own initiatives to lure manufactures and promote EV adoption.

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