According to Yonhap News Agency, on April 18, industry insiders revealed that a South Korean consortium led by LG has decided to withdraw from a project worth approximately 11 trillion won (about $7.7 billion) aimed at establishing an EV battery supply chain in Indonesia.
The consortium includes LG Energy Solution, LG Chem, LX International Corp., and other partners. It is reported that the consortium had been collaborating with the Indonesian government and state-owned enterprises to build an "end-to-end value chain" for EV batteries, covering the entire process from raw material acquisition to precursor production, cathode material production, and battery cell manufacturing. Indonesia is the world's largest nickel producer, a key material in EV batteries.
The aforementioned insiders stated that the consortium decided to cancel the project after negotiations with the Indonesian government, citing changes in the industry landscape, particularly the so-called "EV chasm" phenomenon, which refers to a temporary slowdown or stagnation in global EV demand.
An LG Energy Solution representative said, "Considering market conditions and the investment environment, we have decided to withdraw from the project. However, we will continue our existing operations in Indonesia, such as the HLI Green Power battery plant."
HLI Green Power is a joint venture between Hyundai Motor Group and LG Energy Solution in Indonesia. In early July last year, HLI Green Power began construction of its first EV battery plant. The plant has an annual battery capacity of 10 GWh, making it the first EV battery plant in Indonesia. Additionally, Hyundai Motor and LG Energy Solution plan to invest $2 billion in the second phase of the battery plant to increase its capacity by 20 GWh. At the time, Hyundai Motor Group Executive Chairman Euisun Chung said at the plant's opening ceremony, "Indonesia's mineral resources, such as iron and nickel, are essential components of batteries and will be able to supply materials for millions of EVs globally."