April 23, 2025 | 09:44 pm
TEMPO.CO, Jakarta - Indonesian Minister of Energy and Mineral Resources Bahlil Lahadalia has affirmed that the country's electric vehicle (EV) project will remain unaffected by LG Energy Solution's withdrawal from its electric battery investment in the country. According to him, the departure of the South Korean company will not alter the fundamental framework of the project but will necessitate adjustments to the investment partners within the joint venture (JV) structure.
"Conceptually, the progression of this comprehensive plan remains unchanged. The infrastructure and production schedules will proceed in accordance with the initial roadmap," Bahlil said in a written statement obtained by Tempo on Wednesday, April 23, 2024.
The news of LG Energy Solution's withdrawal originated from reports by a South Korean news agency. The South Korean consortium, spearheaded by LG, announced its decision to terminate the EV battery supply chain project in Indonesia on Friday, April 18, 2025. The project had an estimated value of 11 trillion won, equivalent to US$7.7 billion (approximately Rp129 trillion, based on an exchange rate of Rp16,841 per US dollar).
According to Yonhap news agency, the consortium comprised LG Energy Solution, LG Chem, LX International Corp, and other entities. These business enterprises had previously collaborated with the Indonesian government and State-Owned Enterprises (SOEs) to establish a holistic EV battery supply chain.
Nevertheless, Minister Bahlil clarified that the commitment to EV investment in Indonesia had been established since last July. This was precisely when the 7th President Joko Widodo inaugurated the EV battery cell factory in Karawang, West Java. Bahlil noted that this facility was the result of a collaborative effort between Hyundai Motor Group and LG Energy Solution through PT HLI Green Power, which is currently operational with an annual production capacity of 10 Gigawatt hours (GWh).
Following LG's withdrawal from the Indonesian EV project, Bahlil stated that the government is proceeding with the initiative but without the involvement of the South Korean company in the new joint ventures (JV 1, 2, and 3). "Changes have occurred at the investor level; LG is no longer participating in the new JVs. It has been replaced by a strategic partner from China, namely Huayou," the former minister of investment explained.
Bahlil urged the public and government business partners not to worry about the United States' trade tariff policy, which has recently garnered significant attention. He asserted that geopolitical tensions and global economic conditions would not undermine the sustainability of EV projects within the nation.
"Investments valued at nearly US$8 billion for the subsequent phase of development are still underway. The groundbreaking ceremony for this next stage is scheduled to take place this year, ensuring that there will be no replacement or cancellation of investment as some have feared," Bahlil emphasized.
The EV investment previously agreed upon by the Indonesian government and LG Energy Solution amounted to US$9.8 billion. This agreement was formalized on December 18, 2020, and is considered to be progressing according to the established plan. This project encompasses the development of the entire EV battery supply chain, from mining operations to battery manufacturing.
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