South Korea is turning towards Indonesia to bolster its supply chain for EV batteries and components in a bid to reduce its heavy dependency on China. On the back of a trip by South Korean President Yoon Suk Yeol’s visit to the archipelago for the South Korea-Association of Southeast Asian Nations summit, conglomerate chiefs from the peninsular nation paid a business trip to boost EV cooperation.

The conglomerates comprised Hyundai Motor Group Executive Chair Chung Euisun, LG Group Chairman Koo Kwang-mo, Lotte Group Chairman Shin Dong-bin and LS Chairman Koo Ja-eun. All were to participate in a business discussion on the same day of the trip that would see Korean companies pen memoranda of understanding (MoU) or announce joint ventures with around 20 Indonesian sides.

“It’s crucial to join forces with Indonesia, a country with abundant raw materials (for batteries) like tin, manganese, bauxite and cobalt as well as nickel,” said Shin Yoon-seong, a researcher at the Korea Institute for Industrial Economics & Trade in a report issued by the Korea Chamber of Commerce and Industry.

Experts believe that Indonesia is key in reducing Korea’s dependence on China for its burgeoning EV and battery supply chain.

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“Especially when the US and Europe are effectively shunning China in the global electric car market, it’s strategically important to create a win-win synergy with Southeast Asian countries like Indonesia with abundant minerals and raw materials reserves,” said Kim Da-jong, a business professor at Sejong University, to The Korea Herald.

Hyundai has been boosting its EV business in Indonesia. It operates a manufacturing plant in Bekasi. For July 2023, it sold 3,913 EVs, led by their locally-assembled Ioniq 5 that accounted for 3,819 units. The remaining units consisted of the recently launched Ioniq 6.

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Construction of a joint battery cell plant with LG Energy Solution and a battery pack production plant together with Hyundai Mobis, a car parts manufacturer under Hyundai, are ongoing next to the car plant with plans for both to be operational in 2024.

Hyundai sees Indonesia as a strategic hub as it looks to expand its foothold in the Southeast Asian (SEA) region against well-established Japanese carmakers.

Also Read: Indonesia set to be ASEAN's EV hub; construction of RM 279 mil Hyundai's EV battery plant starts

Alongside Hyundai’s SEA growth, its affiliate Kia is also turning further east towards the region as it looks to set up a car manufacturing plant in Thailand although it has denied any concrete plans on the matter.

LG Group also has some big cards in its hand, having built a plant to assemble household electronics in Indonesia back in 1990.

In the time since, its subsidiaries such as LG Innotek, LG CNS, LG Energy Solution and LG Chem have entered the Indonesian market, bringing the total to 4 manufacturing plants and 8 foreign subsidiaries.

Nonetheless, the core intention behind Koo’s visit was to underscore the importance of forming an EV battery supply chain in the country that will mine and process raw materials to produce EV batteries.

Also Read: Hyundai to close Asia Pacific HQ in Malaysia, moving to Indonesia