South Korea's LG Cancels US$7.7bn Indonesia EV Battery Project

April 22, 2025 | 05:06 pm

TEMPO.CO, Jakarta - A South Korean consortium led by LG announced the cancellation of its electric vehicle battery supply chain project in Indonesia on Friday, April 18, 2025. The project was valued at 11 trillion won, or US$7.7 billion (around Rp129 trillion, based on an approximate exchange rate of Rp16,841 per US dollar).

According to the South Korean news agency Yonhap, the consortium included LG Energy Solution, LG Chem, LX International Corp., and other companies. All entities had previously collaborated with the Indonesian government and State-Owned Enterprises (SOEs) to establish a comprehensive electric vehicle battery supply chain.

The LG-led electric vehicle battery supply chain project in Indonesia was planned to cover the entire process, from raw material procurement to the production of precursors, cathode materials, and battery cells. Indonesia is known as the world's largest producer of nickel, a primary raw material for electric vehicle batteries.

An executive from LG Energy Solution stated that the decision to withdraw from the project was made after consultations with the Indonesian government. The cancellation agreement was attributed to a shift in the industry landscape, particularly what has been referred to as the 'EV chasm', which refers to a temporary slowdown in global demand.

"Taking into account various factors, including market conditions and investment environment, we have agreed to formally withdraw from the Indonesia GP (Grand Package) project," said the LG Energy Solution official in a statement.

Nevertheless, the official stated that LG Energy Solution will continue its existing business in Indonesia, "such as the Hyundai LG Indonesia Green Power (HLI Green Power) battery plant, our joint venture with Hyundai Motor Group," he added.

HLI Green Power, located in Karawang Regency, West Java, was inaugurated by the 7th President of Indonesia, Joko Widodo (Jokowi), on Wednesday, July 3, 2024. The EV battery plant is claimed to be the first and largest battery cell plant in Southeast Asia.

The investment in the electric vehicle battery cell plant is valued at US$3.1 billion, or around Rp45.88 trillion, integrated with the Grand Package upstream-downstream of the battery project. The production facility, already established in the Karawang New Industry City (KNIC) area, is projected to have a capacity of 30 GWh.

HLI Green Power was built in two phases. The first phase cost US$1.1 billion, or approximately Rp16.28 trillion, with a production capacity of 10 GWh. Its commercial production began in April 2024.

The second phase's construction started in January 2024 with an investment of US$2 billion, or around Rp29.6 trillion. Its first commercial production took place in March 2025 with a production capacity of 20 GWh.

PT HLI Green Power is a joint venture between Hyundai Motor Company, LG Energy Solution, and PT Indonesia Battery Corporation (IBC). The investment in HLI Green Power is a follow-up to the signing of a memorandum of understanding (MoU) between the Indonesian Ministry of Investment/BKPM and the consortium (Hyundai, LG, and IBC) on Wednesday, July 28, 2021.

Daniel Ahmad Fajri contributed to the writing of this article.

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