China Tightens Grip on Indonesia’s EV Battery Sector as LG Bows Out

China is stepping up its game in Indonesia’s electric vehicle (EV) battery industry after a major exit by South Korea’s LG-led consortium. LG and its partners have pulled out of a massive US$7.7 billion project meant to build a full EV battery supply chain in Indonesia — giving China’s Zhejiang Huayou Cobalt a clear path to take charge.

LG Energy Solution confirmed on Monday that it, along with LG Chem and LX International, had decided to exit the “Grand Package” project. The reason? Tough market conditions and an investment climate that didn’t look promising anymore.

Back in December 2020, LG had signed a big agreement with Jakarta to cover everything from mining raw materials to making finished batteries. Now, China’s Huayou Cobalt is stepping in to lead the same project, which is also known as Project Titan.

LG’s Future Plans in Indonesia:

Even though LG has stepped away from Project Titan, it’s not completely leaving Indonesia. LG said it would keep working with the Indonesian government through its battery joint venture — HLI Green Power.

HLI Green Power (HLIGP) is a joint venture between LG, Hyundai Motor Group, and Indonesia’s New Energy Materials Investment Holding (earlier known as Indonesia Battery Corporation). Together, they’re focusing on boosting Indonesia’s EV battery sector.

In fact, just last year, HLIGP launched a US$1.1 billion EV battery cell plant in Karawang, West Java — the first of its kind in Southeast Asia. Under their Omega Project, Hyundai and LG also plan to invest another US$2 billion to double the plant’s capacity from 10 gigawatt-hours (GWh) to 30GWh.

Why LG Was Removed?

Interestingly, Indonesia’s Investment Minister Rosan Roeslani revealed that it wasn’t just LG’s choice to leave. The Indonesian government decided to remove LG from Project Titan back on January 31, citing the “long negotiation process” as the reason.

While the faces behind Indonesia’s EV future are changing, the country’s ambition remains strong — to become a major player in the world’s fast-growing electric vehicle industry.