Hyundai Motor Group and LG Energy Solutions Ltd. will build a venture to produce electric vehicle batteries in the country to ensure a supply of batteries in electric vehicles (EV). The two companies have signed a memorandum of understanding (MoU) with the Indonesian government to form a joint venture in Karawang, Bekasi, West Java, on Thursday, July 29, 2021.
This strategic move attends virtually by the Indonesian Minister of Investment, Bahlil Lahadia, and the President Director of Indonesia Battery Corporation (IBC), Toto Nugroho.
Both companies will invest US$1.1 billion in a joint venture to build a battery cell factory.
Thus, each company is entitled to 50 percent share ownership. The Indonesian government also agreed to support through various incentives for the smooth and stable operation’s plant.
The construction begins in the fourth quarter of 2021. It expects to be done in the first half of 2023. Meanwhile, the battery cells’ mass production is expected to begin in the first half of 2024. The factory builts on 330,000 square meters.
The factory location is in Karawang, West Java. Karawang had chosen in considering various factors, including because Indonesia is one of the world’s largest nickel producers. As is well known, nickel is the primary raw material for the manufacture of electric vehicle batteries.
Another factor in choosing Karawang as the factory location is, it is close to Jakarta. In addition, Karawang has a complete transportation network such as airports, ports, and free problem roads.
The construction of the new plant will also help Hyundai and Kia produce vehicles with high efficiency, performance, and safety by supplying optimized battery cells for the two BEV models from the automaker.
The collaboration with LG Energy Solution will also help Hyundai Mobis obtain a supply of electric car battery cells in the future, as demand for electric cars is expected to increase globally. Meanwhile, Hyundai Motor Group plans to expand its BEV lineup to more than 23 models and sell 1 million BEV annually in the global market.