Indonesia’s first production plant for electric vehicle (EV) battery cells was officially launched on Wednesday by South Korean carmaker Hyundai Motor Group and battery manufacturer LG Energy Solution. This milestone marks a significant step for the Southeast Asian country as it aims to capitalize on its abundant raw materials and climb up the EV value chain.
The inauguration of the battery cell production plant, which boasts an annual capacity of 10 gigawatt hours (GWh), was attended by top executives from Hyundai Motor Group and LG Energy Solution (LGES). The facility represents a critical component of a broader commitment by both companies to invest up to $9.8 billion in Indonesia, the largest economy in Southeast Asia. The investment aims to develop a comprehensive EV supply chain, leveraging Indonesia’s rich resources of nickel and copper.
“Mineral resources of this nation, such as iron and nickel, are important components in batteries that will mobilize millions of EVs globally,” Hyundai Motor Group Executive Chairman Euisun Chung stated during the factory’s opening ceremony.
The new plant is strategically integrated with Hyundai’s auto factory, where the company plans to start producing 50,000 units per year of the Kona Electric, an SUV that will utilize batteries manufactured in Indonesia. This integration underscores the potential for a seamless production pipeline from raw material to finished EVs.
Additionally, Hyundai and LGES are preparing to embark on the second phase of the battery plant’s development. This phase involves a substantial $2 billion investment to expand the plant’s capacity by an additional 20 GWh. This expansion will significantly bolster the plant’s output, enhancing Indonesia’s role in the global EV market.
Originally announced in 2021, the battery cell plant in West Java province required an investment of $1.1 billion. It now possesses sufficient annual capacity to produce batteries that can power over 150,000 battery-based electric vehicles. This considerable output positions Indonesia as a vital player in the EV supply chain.
President Joko “Jokowi” Widodo emphasized the plant’s strategic importance in solidifying Indonesia’s position in the global EV supply chain. “This is the first and largest EV battery cell plant in Southeast Asia, and I am confident we will be able to win this competition with other countries because the nickel, bauxite, and copper are here,” Jokowi remarked at the event.
To encourage domestic processing of nickel, Indonesia, the world’s leading producer of the metal, banned its export in 2020. This policy move aimed to attract investments like those from Hyundai and LGES, fostering a more robust domestic EV industry.
On the same day as the inauguration, Indonesia’s Investment Minister Bahlil Lahadalia met with South Korea’s Minister for Trade Cheong Inkyo to discuss further cooperation in electric vehicles, petrochemicals, and clean energy technologies, such as carbon dioxide capture and storage. South Korea’s trade ministry issued a statement underscoring the significance of these discussions.
