Hyundai to Open Car Plant in Indonesia, to Build EVs: Minister


DECEMBER 20, 2018

Jakarta. Hyundai Motor plans to start producing electric vehicles in Indonesia as part of an $880 million auto investment in the country, Deputy Industry Minister Harjanto said on Thursday.

The South Korean company, which together with affiliate Kia Motors is the world's No. 5 automaker, plans to build a factory in Indonesia with a capacity of around 250,000 units, including for electric cars, Harjanto told Reuters.

Indonesia has ample reserves of nickel laterite ore, a vital ingredient for the lithium-ion batteries used to power electric vehicles.

The minister noted the plan was to export 53 percent of the cars manufactured in the proposed Hyundai plant, mostly to Southeast Asia and Australia, while the remaining 47 percent would be for the domestic market.

Hyundai's move to set up a plant in Indonesia comes at a time when the carmaker is trying to cut its reliance on China, its biggest market, where it and Kia are reeling from a weak recovery in sales after a diplomatic row between Seoul and Beijing and facing tough competition from local rivals.

Reuters reported in August that Hyundai and Kia were considering shipping Chinese-made vehicles to Southeast Asia to address its weak sales and its excess capacity.

Hyundai does not have a car factory in Southeast Asia, although it has some pure assembly operations in Vietnam.

A Hyundai spokeswoman said they "did not have immediate comments" about the company's Indonesia plans.

Lee Bo-sung, vice president of the  Hyundai-Kia's think-tank, said separately on Thursday that the market in the Association of Southeast Asian Nations (Asean) has growth potential, but that it is difficult to "penetrate" as it is dominated by Japanese rivals such as Toyota and Honda.

Last month, Hyundai announced a $250 million investment in Singaporean ride-hailing firm Grab and a plan to offer EVs to Grab drivers in Southeast Asia.