JAKARTA (Reuters) – Hyundai Motor Co (005380.KS) plans to start production of electric vehicles (EVs) in Indonesia as part of a around $880 million auto investment in the country, the Industry Vice-Minister Harjanto said on Thursday.
FILE PHOTO: The Hyundai logo is seen during the first press day of the Paris auto show in Paris, France, on October 2, 2018. REUTERS/Regis Duvignau/File Photo
The Korean company, which together with affiliate Kia Motors (000270.LG is the world’s No. 5 automaker, plans to build a plant in Indonesia with a capacity of about 250,000 units, including electric cars, Harjanto told Reuters.
Indonesia has sufficient stocks of nickel laterite ore, a vital ingredient for the lithium-ion batteries used to power EVs.
The minister noted the plan was to export 53 percent of the cars produced in the proposed Hyundai plant, mostly in Southeast Asia and Australia, while the remaining 47 percent would be for the domestic market.
Hyundai’s move to set up a factory in Indonesia comes at a time when the carmaker is trying to cut its dependence on China, the largest market, where it and Kia are reeling from a weak recovery in sales after a diplomatic row between Seoul and Beijing, and is faced with heavy competition from local rivals.
Reuters reported in August that Hyundai and Kia were seen shipping Chinese-made vehicles to South-east Asia for addressing the weak sales and overcapacity.
Hyundai does not have a car, with a factory in Southeast Asia, but it has a number of pure assembly operations in Vietnam.
A Hyundai spokeswoman said they were “not immediately comments” about the company’s Indonesia plans.
Separately, Hyundai-Kia’s think tank, the vice-president Lee Bo-Sung said on Thursday in the asian market has growth potential, but that it is difficult to “penetrate”, as it is dominated by Japanese rivals such as Toyota (7203.T) and Honda (7267.T).
Last month, Hyundai announced a $250 million investment in Singapore ride-hailing firm Grasp and a plan to offer EVs to Grab drivers in South-east Asia.
Reporting by Cindy Silviana and Fanny Potkin in Jakarta and Hyunjoo Jin in Seoul; Editing by with the ipad has Himani