Seoul, April 18 A South Korean consortium led by LG has decided to withdraw a project worth around 11 trillion won ($7.7 billion) to establish an electric vehicle (EV) battery supply chain in Indonesia, industry sources said on Friday.
The consortium, which includes LG Energy Solution, LG Chem, LX International Corp. and other partners, had been working with the Indonesian government and state-owned companies to build an "end-to-end value chain" for EV batteries, reports YOnhap news agency.
The initiative sought to cover the entire process from sourcing raw materials to producing precursors, cathode materials and manufacturing battery cells.
Indonesia is the world's largest producer of nickel, a key material in EV batteries.
The industry sources said the consortium has decided to withdraw the project, in consultation with the Indonesian government, due to shifts in the industrial landscape, particularly the so-called EV chasm, referring to a temporary slowdown or plateau in global EV demand.
"Considering market conditions and the investment environment, we have decided to exit the project," an official from LG Energy Solution said.
"However, we will continue our existing business in Indonesia, such as the Hyundai LG Indonesia Green Power (HLI Green Power) battery plant, our joint venture with Hyundai Motor Group."
Last year, Hyundai Motor Group said completed construction of an electric vehicle (EV) battery plant built jointly with LG Energy Solution Ltd. in Indonesia, allowing the South Korean automotive giant a fully-integrated EV production system in the Southeast Asian nation.
From the opening of HLI Green Power, Hyundai Motor Group said it has established a local integrated production system in Indonesia -- from EV battery cells to finished vehicles -- allowing a strategic advantage in the Southeast Asian EV market beyond Indonesia.
According to Hyundai, HLI Green Power has started production since the second quarter of this year.
Under a goal to achieve carbon neutrality by 2060, Indonesia has announced an ambitious policy to foster its EV industry, including a target to produce 600,000 EVs by 2030.
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