LG reaffirms commitment to Indonesia's EV battery industry

HLI Green Power's plant in Karawang, West Java province, Indonesia / Courtesy of Hyundai Motor Group

LG Group Chairman Koo Kwang-mo

LG Group Chairman Koo Kwang-mo visited Indonesia earlier this month to inspect the electric vehicle (EV) battery production facilities of HLI Green Power, a joint venture established in 2021 by LG Energy Solution (LGES) and Hyundai Motor Group.

LG Group said Monday that Koo visited the joint venture in Karawang, West Java Province, where he emphasized the company's commitment to the EV battery business, which has faced concerns due to a global slowdown in demand.

Writing "I hope it becomes the heart of future mobility" on a battery cell produced at HLI, the chairman also encouraged employees to pursue a level of competitiveness that surpasses global rivals, according to the group’s holding firm, LG Corp.

This is Koo’s first trip to Indonesia since attending a business roundtable in Jakarta in September 2023, and comes about two months after an LGES-led consortium withdrew from the Grand Package project.

The $8 billion project is aimed at building a full EV battery value chain in the mineral-rich country, encompassing raw material extraction, processing and battery cell manufacturing.

After Indonesia tasked China's Huayou Cobalt — one of the participants in the consortium — with leading the project in place of LG, speculation emerged that the Korean conglomerate had become skeptical about the profitability of its overall investment in Indonesia's battery sector amid weakening global demand for EVs.

LGES, the group's battery unit, denied these concerns, announcing an additional investment of at least $1.7 billion in HLI to expand its production capacity. The joint venture, which began mass production in April 2023 on a 320,000-square-meter site, currently has an annual production capacity of 10 gigawatt-hours of batteries —enough to power about 150,000 EVs.

Then-Indonesian President Joko Widodo speaks during the completion ceremony of HLI Green Power's plant in Karawang, West Java province, Indonesia, July 3, 2024. Reuters-Yonhap

Koo’s latest visit is interpreted as a reaffirmation of LG’s commitment to the battery industry of Southeast Asia's most populous nation.

During the visit to HLI Green Power, Koo inspected the battery cell production line, including electrode and assembly processes, and encouraged employees to focus on strengthening LG’s competitiveness in batteries compared to its rivals, according to the group.

In March, Koo told LG Corp.’s shareholders that the group will position LGES as a core growth driver not only for the conglomerate but also for Korea’s industrial future. Last year, he visited Tennessee to encourage employees at Ultium Cells, a joint venture between LGES and General Motors.

"Despite the longer-than-expected EV chasm and intensifying competition with Chinese rivals, Koo has expressed his intent to prepare more thoroughly for the post-chasm era of the EV industry," an LG Corp. official said.

In addition to touring HLI’s battery production lines, Koo also examined LG Electronics’ local operations in home appliance manufacturing, R&D and distribution through his visits to a TV plant in Cibitung, a sales subsidiary in Jakarta and a local retail outlet, Electric City.

According to LG Group, Koo closely analyzed the strategies of Chinese competitors, which have been in fierce competition with the Korean firm to win over Southeast Asian consumers.

"Although it is important to respond to the intensifying competition, I also ask you to focus on building strategies that will help us survive and gain a competitive edge over the next five years," Koo was quoted as saying in LG’s press release.