Hyundai Motor Group (HMG) and LG’s [003550:KS] battery subsidiary LG Energy Solutions (LGES) on July 29 announced to establish a 50-50 joint venture (JV) for an electric vehicle (EV) battery factory in Indonesia with a combined investment of USD1.1bn, as reported by Reuters on the same day. The two companies planned to start the construction of the plant in 4Q21 and to complete it by 1H23. The battery plant will provide Hyundai Motor [005380:KS] and Kia [000270:KS], two of HMG’s subsidiaries, with EV batteries at a competitive price and with a stable supply to promote the group’s development of EVs and reduce carbon emissions.
Prior to this JV, as a partner of HMG, LG already blueprinted its first EV battery plant in Indonesia for the demand of HMG’s EVs on May 25. LG united with Indonesia Battery Corporation (IBC) in a plan of investing USD12bn in building a battery factory in the near future. It is estimated that the production capacity of the factory will reach ten gigawatt-hours (GWh). The partnership of setting up a JV between HMG and LG signals HMG’s need for more EV batteries to achieve its target of having 44 new energy vehicle (NEV) models in 2025.
HMG is ambitious in the field of EVs with a USD87bn investment plan announced in January 2020. Apart from expanding its product portfolio to 44 NEV models by 2025, the group also aimed to build up an autonomous driving platform by 2022 and commence commercial production of self-driving cars from 2024. Moreover, according to a Reuters report on May 13, HMG was considering spending USD7.4bn in the US by 2025 on EV production, production facilities upgrade, and smart mobility solutions investments. HMG’s US expansion plan is also in alignment with the policy that US President Biden announced in January to replace 650,000 tradition-fuel cars with EVs by 2025.