The Indonesian government has been steadfast in ensuring that Indonesia will soon have its own electric vehicle battery cell factory. The factory is the result of a collaboration between the Hyundai Consortium and the Ministry of Investment/Indonesia Investment Coordinating Board (BKPM). The Hyundai Consortium itself consists of the Hyundai Motor Company, KIA Corporation, Hyundai Mobis, and LG Energy Solutions.
A Memorandum of Understanding (MoU) was signed in July 2021 by the Indonesian government, through the Minister of Investment, at an online event with the Hyundai Consortium and PT Industri Baterai Indonesia (IBI). PT IBI is a battery holding SOE company consisting of four companies namely PLN, Pertamina, MIND ID, and Antam.
PT IBI is planned to occupy an area of 33 hectares and expected to be able to absorb 1,000 workers. The production capacity of this factory is estimated to be up to 10-gigawatt hour (GWh) for Hyundai’s electric vehicles. The factory is located in Karawang, West Java.
The purpose of this collaboration is to manufacture conventional vehicles, and also to make Indonesia the center for the development of a battery-based electric vehicle ecosystem. This is feasible for Indonesia because Indonesia has abundant natural resources, such as nickel ore which can increase battery production.
Hyundai Consortium and BKPM Collaboration Progress
Amazing progress has already taken place just two months after the signing of the MoU. In September 2021, PT HKML Baterai Indonesia had done the groundbreaking for the electric car battery factory construction in Karawang New Industrial City, West Java. The groundbreaking cost is US $1.1 billion or equal to Rp15.68 trillion (exchange rate Rp14.257 per dollar). PT HKML Baterai Indonesia will be the first electric vehicle battery factory in South East Asia.
The groundbreaking was inaugurated by President Joko Widodo (Jokowi). The Indonesian government has stated that they will support for this joint venture by easing permits and giving legal certainty for the development of the downstream industry.
Present at the groundbreaking is the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan, the Minister of Investment/Chairman of BKPM Bahlil Lahadalia, SOE Minister Erick Thohir, Ambassador of the Republic of Indonesia to South Korea Umar Hadi, Ambassador of the Republic of Korea to the Republic of Indonesia Park Taesung, Governor of West Java Ridwan Kamil, Regent of Karawang Cellica Nurrachadiana, Chairman of Hyundai Motor Group Chung Eui-sun, President of Hyundai Motor Asia- Pacific Lee Kang Hyun, CEO of LG Energy Solution Jonghyun Kim, CEO of PT HKML Battery Indonesia William Hong.
The First EV Battery Factory in Southeast Asia
The joint venture between the Indonesian government and the Hyundai Consortium paves the way to a positive future for Indonesia’s economic condition. Not only will it create employment opportunities, but this factory will also be the first in Indonesia and Southeast Asia. The factory will have mining facilities, smelting facilities, precursory production, battery packs, stabilizers, and even recycling facilities. The aim is to produce electric vehicle batteries, sell them at a competitive price, and be able to export battery cells. Indonesia’s goal is to be the center for the development of a battery-based electric vehicle ecosystem.
President Jokowi is confident that the building of this factory will contribute significantly to Indonesia’s economic growth. This is because Indonesia has the largest nickel reserve in the world. In 2019, Indonesia was able to produce 29,6% of the world’s total ore reserves. This huge amount was produced while still having sustainable nickel ore production. If nickel is processed from raw goods into finished goods, the added value will increase. It is estimated that once nickel is processed into electric batteries, the added value will increase up to six to seven times. Once turned into electric cars, the value will increase eleven times. Lower manufacturing costs in Indonesia also mean that Indonesia will be able to sell electric cars at a competitive price.
The Minister of Investment/Chairman of BKPM, Bahlil Lahadalia, states that the electric vehicle battery factory will prioritize creating new job opportunities for both local and foreign workers. Keep in mind that for foreign workers as long applicant fulfills special specifications and certain positions.