Hyundai-LG's Indonesian battery JV promised of benefits in raw material supply and price

[Graphics by Song Ji-yoon]

A $1.1 billion joint-venture project by Hyundai Motor and LG Energy Solution to establish a 10GWh capacity battery cell plant in Indonesia under full blessing from the host country will be supplied with raw materials at favorable terms to help the Korean consortium gain fast ascension in the EV market of Southeast Asia.

Agus Gumiwang Kartasasmita, Indonesia’s Minister of Industry, told local reporters that the state would be cheaply feeding raw materials for battery cells to the Korean JV plant. Shipments within the country could save cost by 30 to 40 percent, he added.

Indonesia is one of the world’s largest producers of cobalt, mangan, and nickel, essential materials for EV batteries. As the raw materials take up 40-50 percent of the price of a battery, the new factory will be able to have competitiveness edge in raw material supply security and prices.

[Source: Hyundai Motor and LG Energy Solution]

Battery cost has been on a downward trend from $293 per kWh in 2016 to $156 in 2019 and $120 in 2020, but the declining pace has slowed down recently due to an increase in raw materials cost.

Hyundai Motor and LG Energy Solution aim to produce 10GWh of batteries per year from the new Indonesian factory starting 2024. The Indonesian government eager in nurturing EV-related industries has vowed to provide the JV with various incentives and rewards, such as tax exemptions on EVs and various components and facilities.

They are preparing to break ground for the factory construction in the fourth quarter of the year after completing the establishment of a JV company in the third quarter. LG Energy Solution plans to apply smart technology on the factory to further raise productivity efficiency.

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