LG pulls out of RM37bil Indonesia EV battery project

LG Energy Solution (LGES) has pulled out from a Rp142 trillion (RM36.9 billion) deal it signed with the Indonesian government in 2020 – called Indonesia Grand Package – to develop EV battery manufacturing in the country, Reuters reports.

“Taking into account various factors, including market conditions and investment environment, we have agreed to formally withdraw from the Indonesia GP (Grand Package) project. However, we will continue to explore various avenues of collaboration with the Indonesian government, centering on the Indonesia battery joint venture, HLI Green Power,” LGES said in a statement.

HLI Green Power, an LGES-Hyundai Motor Group joint-venture, last year inaugurated Indonesia’s first battery cell production plant with a 10-gigawatt-hour annual capacity, with plans to expand the capacity in the second investment phase.

“Even though LG has exited, Indonesia remains convinced our nickel is more competitive than other countries,” energy ministry official Tri Winarno told reporters, adding that the country will continue seeking foreign partners to develop the battery industry.

Indonesia Battery Corporation and miner Aneka Tambang were among the state-controlled firms hoping to partner with LGES; the former went on to establish a joint-venture with CBL, a CATL subsidiary.

News of Hyundai and LG wanting to jointly make EV batteries in Indonesia first surfaced in 2020, and the joint-venture was announced in July 2021 before plant construction began that September. In 2022, the two Korean companies secured US$710 million (RM3.1 billion) in financing for the plant.

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