LG, Hyundai to unveil Indonesia joint venture plan next week

By Kim Bo-eun

LG's battery manufacturing unit and Hyundai Motor will unveil a joint venture in Indonesia in early June, sources said Tuesday.

The two companies have been in discussion with Indonesian authorities over the investment for years, and Indonesian Investment Minister Bahlil Lahadalia appears to have visited Seoul for final arrangements before the venture plan is announced.

The minister met with LG Energy Solution CEO Kim Jong-hyun and Hyundai Motor Group Chairman Chung Euisun on Monday, the first day of his four-day visit to Seoul.

Under the joint venture, LG is set to supply its batteries for Hyundai's EV models to be produced in Indonesia. Hyundai is constructing a factory in Bekasi, 20 kilometers east of Jakarta, capable of producing up to 250,000 vehicles on an annual basis. The plant is nearing completion and is set to launch operations within the year. Hyundai is seeking opportunities in the market dominated by Japanese carmakers. The Southeast Asian country is considered a lucrative market given its vast population exceeding 200 million.

Hyundai will start with internal combustion engine vehicles and introduce EVs in the coming years. The joint venture plant in Indonesia is set to serve as a strategic location for Hyundai to export its EVs to the potential markets of Vietnam and Thailand.

Hyundai Motor and LG have a decades-long history of working together with regard to batteries.

"We cannot comment until official announcements are made," an LG Energy Solution official said. Hyundai Motor provided the same comment.

Separate from the JV, the Indonesian government stated a consortium of LG affiliates including LG Energy Solution is setting up a $1.2 billion EV battery plant with its state-run Indonesia Battery Corporation. The factory with a capacity of 10 gigawatt-hours will be set up in Bekasi.

The Indonesian government said the consortium includes LG Chem, LG Energy Solution, LG International, Korea's steelmaker POSCO and China's cobalt producer Huayou Holdings. The plant is part of a larger package deal for LG to invest in the Southeast Asian country.

Indonesia's Minister Lahadalia was quoted as stating the plant will supply batteries for Hyundai Motor, but sources said Hyundai is set to source its EV batteries under its joint venture with LG.

A source said LG's investment in the form of a consortium with an Indonesian entity will likely take more time.

LG signed a memorandum of understanding with the Indonesian government on investments into the Southeast Asian country in December.

The Indonesian Embassy in Korea did not provide an immediate response regarding the investments.

Indonesia is an investment destination for EV and battery makers due to the country's abundant resources for battery materials. Indonesia has the world's largest reserves of nickel, one of the key materials used in manufacturing batteries. Based on the reserves, the Indonesian government has actively been seeking to attract foreign investment into the country.