(Reuters) - South Korea's Hyundai Motor Group and LG Energy Solution said on Thursday they would set up a joint venture (JV) in Indonesia to establish a battery cell plant for electric vehicles (EV), investing $1.1 billion with each owning half the business.
The JV will help Hyundai Motor Co and its sister company Kia Corp secure a stable supply of EV batteries at a competitive price for their battery electric vehicles.
LG Energy Solution (LGES), the wholly owned battery subsidiary of LG Chem Ltd, and Hyundai signed a memorandum of understanding with the Indonesian government to build the plant in the country, the companies said in a joint statement on Thursday.
The news comes as global automakers move to secure EV batteries in anticipation of a rise in sales because of government subsidies and quotas worldwide seeking to cut carbon emissions.
Construction of the plant will start in the fourth quarter of 2021 and will be completed by the first half of 2023, the companies said.
Indonesia is promoting the domestic development of EV and battery production to create a downstream industry for the country's rich supply of lithium battery ingredient, nickel laterite ore.