LG-led Consortium Pulls Out of $7.7 Billion Battery Project in Indonesia

Key Takeaways

LG-led consortium withdraws from $7.7 billion project.
Project aimed to create a comprehensive EV battery supply chain.
Indonesia is the largest nickel producer globally.
Decision influenced by a slowdown in global EV demand.
Existing operations in Indonesia will continue, including HLI Green Power.

Seoul, April 18 (NationPress) A consortium from South Korea, spearheaded by LG, has opted to withdraw from a project valued at approximately 11 trillion won ($7.7 billion) aimed at creating an electric vehicle (EV) battery supply chain in Indonesia, as reported by industry insiders on Friday.

The consortium comprises LG Energy Solution, LG Chem, LX International Corp., among others, and was collaborating with the Indonesian government and state-owned enterprises to develop an “end-to-end value chain” for EV batteries, according to YOnhap news agency.

This initiative was designed to encompass the full spectrum from extracting raw materials to producing precursors, cathode materials, and manufacturing battery cells.

Indonesia stands as the world’s leading producer of nickel, a critical component in EV batteries.

Sources within the industry indicate that the consortium has made the decision to withdraw from the project after discussions with the Indonesian government, attributing the move to changes in the industrial environment, especially the so-called EV chasm, which denotes a temporary slowdown or plateau in global EV demand.

“In light of market conditions and the investment climate, we have chosen to exit the project,” stated an official from LG Energy Solution.

“Nonetheless, we will maintain our ongoing operations in Indonesia, such as the Hyundai LG Indonesia Green Power (HLI Green Power) battery plant, a joint venture with Hyundai Motor Group.

Last year, Hyundai Motor Group announced the completion of an electric vehicle (EV) battery facility built in partnership with LG Energy Solution Ltd. in Indonesia, enabling the South Korean automotive leader to establish a fully-integrated EV production framework in the Southeast Asian nation.

Since the opening of HLI Green Power, Hyundai Motor Group has developed a local integrated production system in Indonesia — from EV battery cells to finished vehicles — providing a strategic edge in the Southeast Asian EV market and beyond.

According to Hyundai, HLI Green Power commenced production in the second quarter of this year.

With a commitment to achieving carbon neutrality by 2060, Indonesia has unveiled an ambitious initiative to promote its EV industry, including a target to manufacture 600,000 EVs by 2030.