Jung Eui-sun and Koo Kwang-mo to Lead Southeast Asia Electric Vehicle Market

Hyundai Motor Group and LG Energy Solution Establish Battery Cell Joint Venture Factory in Indonesia
Last June, Hyundai Motor Group Chairman Chung Euisun and LG Group Chairman Koo Kwangmo's Battery Meeting Bears Fruit

Hyundai Motor Group Chairman Chung Eui-sun and LG Group Chairman Koo Kwang-mo are shaking hands after discussing cooperation in the electric vehicle battery sector at LG Chem's Ochang plant in Cheongju, Chungbuk, on June 22 last year.

[Asia Economy Reporter Changhwan Lee] Hyundai Motor Group and LG Group are establishing a battery cell joint venture factory in Indonesia to actively target the Southeast Asian electric vehicle market.

This is a concrete outcome following the "battery meeting" held last June between Hyundai Motor Group Chairman Chung Euisun and LG Group Chairman Koo Kwang-mo. The two companies aim to secure a leading position in the Southeast Asian electric vehicle market through their first overseas joint venture, created by the collaboration of Korea's leading automaker and battery company.

Hyundai Motor Group and LG Energy Solution announced on the 29th that they have signed an investment agreement with the Indonesian government for a battery cell joint venture factory. The joint venture factory, to be established in the Karawang region of Indonesia, will have a capacity of 10GWh, capable of producing batteries for more than 150,000 electric vehicles annually.

The two companies plan to invest approximately $1.1 billion (about 1.2663 trillion KRW) to establish the joint venture factory. Hyundai Motor Group and LG Energy Solution will each hold a 50% stake in the joint venture.

This agreement is the result of the first exclusive meeting between Chairman Chung and Chairman Koo last year, where they discussed cooperation in the battery business. On June 22 of last year, the two met at LG Chem's Ochang plant in Cheongju, Chungbuk, to discuss expanding battery investment cooperation. Following this meeting, investment cooperation in Indonesia proceeded in earnest.

Hyundai Motor and LG Energy Solution have already been cooperating for a long time in the electric vehicle business. LG Energy Solution's batteries are used in Hyundai's major electric and hybrid vehicles. This joint venture is expected to further strengthen the strategic partnership between the two companies.

Hyundai Motor Group and LG Energy Solution plan to complete the establishment of the joint venture corporation by the third quarter and begin construction of the joint venture factory in the fourth quarter. The goal is to complete construction by the first half of 2023 and start mass production of battery cells within the first half of 2024.

The Indonesian government has promised incentives such as a temporary exemption from corporate tax, tariff exemptions on various equipment and parts for operating the joint venture factory, and enhanced tax benefits related to electric vehicles to support the successful establishment of the joint venture factory and the expansion of the Indonesian electric vehicle market.

A Hyundai Motor Group official said, "Through this joint venture, we will be able to maximize LG Energy Solution's battery technology, a global top-tier company in the electric vehicle battery industry, and our long-accumulated expertise in automobile production and quality management."

An LG Energy Solution official also emphasized, "By establishing the first overseas joint venture between a domestic battery company and an automaker group, we will maximize synergy creation and strengthen our global electric vehicle market strategy."