Hyundai Motor Group and LG Energy Solutions have started construction on Indonesia's first electric vehicle gigafactory, the two companies said in a joint statement Sept. 15.
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The companies said that they aimed to complete construction of the $1.1 billion, 50:50 joint gigafactory in the first half of 2023, with mass production of nickel cobalt manganese aluminum, or NCMA, lithium-ion battery cells scheduled to start in H1 2024.
The 10 GWh plant, located in Karawang New Industry City in the Karawang region of West Java, is due to produce over 150,000 EV batteries initially, with the ability to increase production capacity to 30 GWh in the future in conjunction with increasing demand for EVs.
Hyundai and LGES signed a contract earlier in 2021 to establish a battery cell joint plant and completed the establishment of a joint venture in August.
Asian companies are looking increasingly to Indonesia as a battery metal hub, as the country has a big nickel mining industry, as part of which cobalt is mined as a byproduct.
The companies said that Indonesia was an attractive location for a gigafactory, as the government was "promoting the promotion of electric vehicle-related industries in the country and the expansion of EV distribution," and "continuously increasing the localization rate of parts by providing incentives such as exemption from the luxury tax for electric vehicles through the 2019 Presidential Decree."
The government signed an investment agreement with the two companies in July, in which it agreed to support the successful operation of the joint factory by providing incentives, such as exemption from corporate tax and tariffs on various facilities and parts for a certain period of time.
"The government fully supports the development of the battery and electric vehicle industry ecosystem and continues to roll out structural reforms to provide legal certainty and ease of licensing to business actors and investors in developing their businesses in the country," Indonesian President Widodo said on Twitter from the groundbreaking ceremony.
The gigafactory is part of a $9.8 billion EV battery investment deal signed by the Indonesian government and LG Energy Solutions in December 2020 to create an integrated battery supply chain from mining to EV battery production.
In May, Indonesia's investment minister Bahlil Lahadalia said state-owned Indonesia Battery Corp. planned to build a 10 GWh gigafactory worth $1.2 billion in the city of Bekasi with a consortium of Asian companies, including South Korea's LG Chem, LG Energy Solution, LG International, South Korean steelmaker POSCO and China's Huayou Holdings.
Lahadalia added at the time that the 10 GWh capacity would be the first phase of the gigafactory, which would see EVs manufactured by automaker Hyundai.