LG Commits US$1.7 Billion in Indonesia Battery Expansion
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Karawang plant is Southeast Asia's first and largest EV battery facility.
By Kenzie Aryasatya, Fayza Nawra Avanitanya, Muthia Noor Safitri, Imam Fakhri Prayogo Harianto
May 2, 2025 at 16:30 GMT+7
LG Energy Solution (LGES) is investing an additional US$1.7 billion into its battery cell joint venture in Karawang, West Java, bringing the total to US$2.8 billion. This decision follows LG’s withdrawal from a separate US$8.46 billion electric vehicle (EV) supply chain project in Indonesia, considering the unfavorable market conditions.
Despite stepping away from the upstream Titan project, LG remains committed to the downstream battery manufacturing venture through its partnership with Hyundai, known as HLI Green Power. The Karawang facility, which began operations in mid-2024, currently produces 10 gigawatt-hours (GWh) of battery cells annually.
With the new investment, production capacity will double to 20 GWh, enough to power around 300,000 electric vehicles each year.
LG Manufacturing Plant | Source: lst/ LG Energy Solution
The Karawang plant, being Southeast Asia’s first and largest EV battery facility, began operations in July 2024. Launched by former President Joko Widodo, the project signals Indonesia’s ambition to become a leader in the electric vehicle sector.
The plant uses advanced NMC (nickel, manganese, cobalt) technology, which offers high-performance batteries suited for modern electric vehicles. Its location is ideal, positioned close to Indonesia’s rich nickel reserves and Hyundai’s vehicle assembly lines, helping to cut production costs and improve efficiency.
As the expansion plans for the plant move forward, Investment Minister Rosan Roeslani emphasized the growing interest in the project, “I will visit the [Karawang] plant tomorrow. LG had initial talks with us about their interest in investing another US$1.7 billion”. With LGES and Hyundai’s joint efforts, this facility is set to play a central role in meeting the region’s growing demand for electric vehicles.
Containers holding battery cell packaging at HLI Green Power. The Karawang facility| Source: Antara Foto
As Indonesia continues to build momentum in the EV sector, it has quickly become an attractive destination for global investment in the electric vehicle supply chain. The country holds 21% of the world’s nickel reserves, an essential component for EV battery production.
To encourage more local processing and attract foreign investment, Indonesia has banned the export of raw minerals. This move is already showing results, with South Korea investing US$683 million in the first quarter of 2025, making it a key contributor to Indonesia’s foreign investments.
Indonesia offers a competitive advantage for investors with its low labor costs, abundant resources, and strategic location. Despite LGES withdrawing from one major project, other companies, such as Huayou Cobalt, are still confident in Indonesia’s growing role in the global EV market.
Sources:
Bloomberg
Jakarta Post
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