Arya Dipa, Bandung – Carmaker Hyundai Motor Asia-Pacific is planning to start manufacturing electric cars in West Java by 2022, as Indonesia plans to produce batteries for electric vehicles (EVs), the company's vice president announced on Monday.
The company's vice president and chief operations officer, Lee Kang Hyun, said the EVs would be produced in Hyundai's first manufacturing center in Southeast Asia in Delta Mas, Cikarang, West Java.
"With the support of ministries and the local government, the factory's construction is 65 percent done despite the COVID-19 pandemic," he said during a press conference at the 2020 West Java Investment Summit in Bandung on Monday.
Lee said the factory would start producing cars by the end of next year, with a projected capacity of 150,000 cars by the second half of 2021. The full annual target is 250,000 vehicles.
The 77.6-hectare factory requires an investment of at least US$1.55 billion, including operational costs and product development, he added.
As the world's largest producer of nickel, Indonesia is eyeing a more strategic position in the global supply chain for the development of lithium batteries and, eventually, electric cars. Under President Joko "Jokowi" Widodo's administration, the local automotive industry is expected to begin domestic EV production by 2021 or 2022, with a target of exporting 200,000 electric cars by 2025.
State-Owned Enterprises Minister Erick Thohir stated in October that Indonesia had potential in mineral and coal downstreaming as the country had an abundance of nickel reserves, the main ingredient in EV batteries.
The government was reportedly discussing an investment between $12 billion and $20 billion with China's largest EV battery maker, CATL, and South Korea's LG Chem to build an end-to-end supply chain for EV batteries.
Investment Coordinating Board (BKPM) chief Bahlil Lahadalia said in a virtual webinar on Monday that CATL had inked an agreement to invest $5.1 billion in the country.
Lee acknowledged the government's invitations to CATL and LG Chem, which he thought would help Indonesia to reach its goal of having a fully formed electric vehicle industry.
"Prior to this partnership, Indonesia inevitably had to import EV batteries, but with the investment in the near future, soon we can have locally made batteries," Lee said, adding that Hyundai pledged to have its electric cars use locally made batteries.
He added that the local content for Hyundai cars produced at the factory would exceed 40 percent so that products could be exported to countries like Thailand.
Meanwhile, West Java Governor Ridwan Kamil reportedly ordered for the Hyundai vehicles to be used by government personnel for official use.
During the summit, the governor also launched the Rebana Special Economic Zone (SEZ) development project.
The area will stretch over 43,900 hectares, he said, and cover seven locations, including Cirebon and Cirebon regency, Majalengka, Indramayu, Kuningan and Sumedang. The area will also cover Kertajati International Airport in Majalengka and the Japan-backed Patimban seaport in Subang.
"Metropolitan Rebana is designed to be very futuristic and well-organized as a sustainable metropolitan area in Indonesia," Ridwan said.
The SEZ was expected to absorb 5 million workers by the end of 2030 and boost the West Java economy by 4 percent, he added.
The West Java economy shrank 4.08 percent year-on-year (yoy) in the third quarter this year, as the country's gross domestic product also fell by 3.49 percent yoy in the same period, Statistics Indonesia (BPS) data show.
"The SEZ we will contribute to national growth in 10 years. So this project must be successful because without it, West Java will develop very slowly," Ridwan said.
West Java Investment and One-Stop Integrated Service Agency head Noneng Komara said that the agency planned to offer Rp 32.1 trillion worth of investment during the West Java Investment Summit, held from Nov. 16 to Nov. 19.
She said that most of the investment, at Rp 28.5 trillion, was expected to go to the Rebana SEZ project.
According to Noneng, the agency is also preparing 27 other investment projects, from the Rp 10 trillion investment for the Subang Integrated Industrial Zone to the Rp 9 trillion Subang Smartpolitan project and Rp 1.25 trillion Kertajati Industrial Estate in Majalengka. (eyc)