Nasori, Jakarta – South Korean automotive giant Hyundai Motor Company has announced a $1.55 billion investment plan to develop electric vehicles in Indonesia over the next decade.
Hyundai made the announcement when President Joko "Jokowi" Widodo visited the company's factory in Ulsan, South Korea, on Tuesday.
Won Hee Lee, Hyundai's chief executive officer, and Bahlil Lahadalia, the head of Indonesia's Investment Coordinating Board (BKPM), signed a memorandum of understanding for the investment during the visit.
Also present at the signing ceremony were Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan and Eon Tae Ha, Hyundai's executive vice president.
Bahlil said he believed the Hyundai investment would benefit the Indonesian economy, not least by creating 3,500 new jobs.
"In addition, Hyundai will also build a training center and a research and development center for electric cars," Bahlil said in a statement.
Bahlil said Indonesia had asked Hyundai to maximize the use of domestic raw materials and collaborate with local businesses to make the electric vehicles in its Indonesian factory.
"Most of the materials for electric car batteries can come from Morowali. We also have many rubber and tire producers," Bahlil said. Morowali is the main nickel-producing region in Southeast Sulawesi.
Indonesia has aired its intention to become a global production center for electric vehicles by leveraging its abundant nickel ore resources.
Nickel comprises up to 80 percent of the materials used in lithium-ion batteries that power modern electric vehicles from Tesla to Xiaomi scooters.
Hyundai plans to carry out its investment in two stages. In 2019-2021, the company will focus on investing in an internal combustion engine car manufacturing plant and will export at least 50 percent of its total production.
In the second stage, from 2022 to 2030, Hyundai will develop an electric car manufacturing plant, transmission plant, research and development center and training center. Hyundai aims to export 70 percent of its car production by this period.
The Hyundai plant is expected to start production in 2021, with a capacity of 70,000 to 250,000 units per year, including electric cars.
Hyundai said Indonesia's nickel resources played a major role in tilting its decision to invest in the local electric vehicle plant.