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Hyundai Motor Group accelerates EV push with Indonesia JV with LGES Automotive conglomerate effectively has control of JV despite equal 50% stake

Translated by Ryu Ho-joung 공개 2021-08-02 07:55:41

이 기사는 2021년 08월 02일 07:52 더벨 유료페이지에 표출된 기사입니다.

Hyundai Motor Group has teamed up with battery maker LG Energy Solution (LGES) to build a battery cell plant in Indonesia as the South Korean automotive conglomerate accelerate its shift to electric vehicles.

The two parties on Wednesday agreed to invest a total of $1.1 billion to set up a battery cell plant in Karawang, Indonesia, that will have an annual output of 10 gigawatt-hours. The deal marks the first partnership between two South Korean companies to create a battery joint venture aboard.

Hyundai Motor Group and LGES will each invest $550 million in the joint venture to have a 50% stake. But despite their equal stakes, Hyundai will likely have effective control of the Karawang plant, industry watchers said.

The subtle dynamics of the relationship between the two parties could be sensed from the fact that they on Thursday distributed the same press releases primarily focusing on Hyundai Motor Group. This contrasts with common practices where companies issue their own news releases when announcing a partnership.

LGES is one of the leading battery makers with many global automakers among its customers. Apart from the announced joint venture with Hyundai, LGES has four plants in South Korea, the US, China and Poland. But LGES’s press release did not mention such things and only said that the joint venture will produce batteries for Hyundai’s electric cars.

This seems to signify that LGES is conscious of Hyundai’s plans to internalize battery manufacturing, observers said. Hyundai Motor earlier this year announced that it started to develop battery technology in order to produce batteries for its own vehicles. This means a possibility for major domestic battery makers, including LGES, to lose one of their key customers and also the risk of intensified competition.

Hyundai Motor made it clear that it is willing to partner with domestic and overseas battery makers but it will take the leadership of potential partnerships. For LGES, it would be the best choice to continue the partnership with the automaker as long as possible.

“Issuing the same press releases was based on the agreement between the two parties. There are no other reasons,” said a LGES representative.

The joint venture between Hyundai and LGES will be the first battery cell factory in the Southeast Asia region. Karawang, near the Indonesian capital Jakarta, is not far from where Hyundai’s Indonesia plant is located. Battery cells produced by the Karawang palnt will be used in Hyundai and Kia’s electric vehicle models scheduled to be launched in 2024.

“It’s undecided yet whether or not our Indonesia plant will produce electric vehicles,” said a representative for Hyundai Motor. (Reporting by Su-jin Yoo)
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