Hyundai Motor and LG Chem have announced they will build a battery plant for EVs in Indonesia. The investment of $1.1 billion will be shared equally. The plant will mass produce batteries in Indonesia, which has the world’s largest reserves of nickel, and supply them to Hyundai Motor and Kia’s complete vehicle plants around the world. The new plant will be established on a 330,000 square meter site in an industrial park in the Karawang region, about 65 kilometers southeast of central Jakarta. Construction will begin by the end of this year and mass production will begin in 2024.
The plant will have an annual production capacity of 10 gigawatt-hours, enough to supply batteries for 150,000 EVs. Hyundai and Kia have a plan to launch a total of 23 new EV models in the next five years. In order to expand the range to include sedans, SUVs, and the Genesis luxury brand, stable procurement of batteries, a key component, has been an issue. The company’s first joint venture plant will lead to a long-term shift to EVs.
In order to build the joint venture plant, the company will receive corporate tax and tariff exemptions from the Indonesian government. The Indonesian government is aiming to build a cluster of EV-related industries against the backdrop of abundant reserves of nickel, a key material for EV batteries. According to the U.S. Geological Survey, the country’s estimated nickel reserves as of 2008 are the world’s largest at 21 million tons. The government has decided to embargo raw nickel in order to attract foreign investment.
Source: The Nikkei
PSR Analysis: In last month’s issue of PowerTALK, I wrote that Hyundai and LG are building a battery plant in the U.S., and now they are going to set up another plant in Indonesia. I have to admit that I was surprised by their speed. The battery business has become a trend, and battery procurement is getting more and more intense, but while Japanese automakers have yet to report that they are building new plants, South Korea is moving very fast.
Indonesia is also targeting China and the US. In this kind of movement, speed is the most important factor, and it is very difficult for a latecomer to overtake a predecessor. Of course, Indonesia is very determined to use nickel, its own strategic material, to gain benefits from other countries, and it seems to be exploring which countries might be suitable partners.
In any case, the demand for batteries is sure to increase in the foreseeable future, and Hyundai and LG are rightly making efforts to develop a system that can adequately supply this demand. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
