Global automakers, including those from Korea, continue to invest in Indonesia, building finished vehicle and battery plants to advance into the market.

Korean companies, including Hyundai Motor Company and LG Energy Solution, have entered the Indonesian market by building joint ventures for electric vehicles and battery cells, while global automakers such as CATL and Toyota have also entered the Indonesian market by building electric vehicle production plants and battery production complexes.

The Indonesian market is emerging because local supply of nickel, a key raw material for battery manufacturing essential for electric vehicle production, allows for savings in logistics costs when manufacturing vehicles and batteries.

Earlier, Hyundai Motor Group Chairman Chung Eui-sun emphasized that “Indonesia is a key base for Hyundai Motor Company’s future mobility strategy,” showing that the company is investing heavily in Indonesia.

Hyundai Motor Company has begun preparations for a full-scale attack on the Indonesian market, announcing that it is discussing building an electric vehicle manufacturing facility in Indonesia with Ford of the United States.

Hyundai Motor Company and LG Energy Solution broke ground on a battery cell plant in a joint venture site in the Karawang New Industry City (KNIC) in Indonesia in September 2021. The joint battery cell plant between the two companies will be built on a site totaling 330,000 square meters and is scheduled for completion in the first half of 2023, with mass production of battery cells scheduled to begin in the first half of 2024.

boutThe battery cells produced at the plant are expected to be high-performance NCMA lithium-ion battery cells that utilize LG Energy Solution's new battery technology, adding aluminum to increase output and reduce chemical instability in addition to high nickel, cobalt, and manganese.

The battery cells from the joint venture plant will be installed in various electric vehicles to be developed in the future, including dedicated electric vehicles equipped with Hyundai and Kia's E-GMP starting in 2024.

▲ Hyundai Motor Company's Indonesian plant (Photo source: Hyundai Motor Group)

Hyundai Motor Company has already begun mass production of the Ioniq 5 in the Delta Mas Industrial Complex in Bekasi, Indonesia, in March 2022.

According to Hyundai Motor Company, the Indonesian plant is built on a 777,000-square-meter site and is expected to have an annual production capacity of 150,000 units by the end of this year and 250,000 units in the future.

The total investment is approximately $1.55 billion, including product development and plant operating costs.

Global companies are also fiercely competing to dominate Indonesia's emerging electric vehicle market.

▲ Indonesian companies of major global automobile companiesCurrent Status of Electric Vehicle Market Strategy (Source: Ministry of Science and ICT, No. 227, Science, Technology & ICT Policy and Technology Trends)

Global automakers such as Toyota, CATL, and Tesla are actively investing in Indonesia, establishing electric vehicle production plants and building battery production complexes.

Toyota announced in July that it would invest approximately 2.37 trillion won in Indonesia over the next five years to develop and produce various types of electric vehicles.

CATL announced in April that it would build a battery production complex, including raw materials, worth approximately KRW 7.3346 trillion.

It plans to build a battery production complex in collaboration with Indonesian state-owned companies PT AnekaTambang and PT Industri Baterai Indonesia, and also plans to build a battery recycling plant in the northern region.

According to the Ministry of Science and ICT, Indonesia is moving to become an electric vehicle hub, backed by government support and natural resources. As the largest automobile market in ASEAN, Indonesia plans to increase the proportion of electric vehicles in total vehicle sales to 30% by 2035 by 2025.

To this end, the government is strengthening its eco-friendly car policy by providing incentives such as selecting plug-in hybrid vehicles (PHEVs), pure electric vehicles (BEVs), and fuel cell vehicles (FCVs) as tax-exempt vehicles and reducing the automobile ownership tax and vehicle title transfer tax by 70% for pure electric vehicles.

The background to this aggressive policy is the abundance of resources.

According to Investing News Network, Indonesia is the world's largest nickel producer, with estimated nickel reserves of 21 million metric tons (24% of global reserves) and production of 1 million metric tons as of 2022. />

▲ Top 5 Indonesian Nickel Mines in 2021 (Image: Reprocessed from GlobalData)

Indonesia, which holds approximately 24% of the world's nickel reserves and produces battery raw materials such as manganese and cobalt, has been actively attracting investment from overseas companies producing electric vehicles and batteries since the end of 2019, suspending all nickel ore exports.

Nickel is a key raw material in batteries, which plays a significant role in extending the driving range of electric vehicles.

The Ministry of Science and ICT recently analyzed that global battery companies are targeting the Indonesian market as a battleground to secure a stable nickel supply instead of Russian nickel, which has become unstable due to Russia's invasion of Ukraine.

According to the Korea Resources Information Service, nickel soared to $26,105 per ton on February 24, the day Russia began its invasion of Ukraine, to $42,995 on March 7, and to $28,625 on December 16.

The London Metal Exchange (LME) reported that the price of nickel fell from $42,995 on March 7 to $101.36 during the following day's trading session.Trading in nickel was halted on March 8 after it surged 250% to $5.

Nickel inventories continue to decline without significant increases, from 101,256 tonnes in early February to 53,958 tonnes currently.