Azernews.Az

By Alimat Aliyeva

A Korean consortium led by LG has decided to withdraw from a project worth approximately 11 trillion won ($7.7 billion) to establish an electric vehicle (EV) battery supply chain in Indonesia, industry sources confirmed on Friday, Azernews reports.

The consortium, which includes LG Energy Solution, LG Chem, LX International, and other partners, had been collaborating with the Indonesian government and state-owned companies to build an "end-to-end value chain" for EV batteries.

The initiative aimed to cover the entire production process, from sourcing raw materials to producing battery precursors, cathode materials, and manufacturing battery cells.

Indonesia is the world’s largest producer of nickel, a critical raw material for EV batteries, making it a key player in the global EV supply chain.

Industry sources explained that the consortium's decision to withdraw follows consultations with the Indonesian government. The main reason for the exit appears to be shifts in the global EV market, particularly a slowdown in demand, often referred to as the “EV chasm,” a temporary plateau in the growth of electric vehicle adoption and demand for associated components.

"Given the current market conditions and investment environment, we have decided to withdraw from the project," an official from LG Energy Solution stated.

However, the official emphasized that the consortium will continue its existing business operations in Indonesia, including the Hyundai LG Indonesia Green Power battery plant, which is a joint venture with Hyundai Motor Group.

The decision to pull out of this major project highlights the challenges faced by the EV sector, which is grappling with fluctuating demand, shifting market dynamics, and the complexities of global supply chains. Despite this, South Korean companies, including LG, remain heavily invested in the future of EV batteries and sustainable energy solutions, with a strong focus on maintaining their presence in the Indonesian market.