JV between two South Korean companies Based on a joint statement between Hyundai Motor Group and LG Energy Solution, they will work together. More specifically, two companies will establish an […]
JV between two South Korean companies
Based on a joint statement between Hyundai Motor Group and LG Energy Solution, they will work together. More specifically, two companies will establish an electric vehicle battery cell manufacturing joint venture in Indonesia.
The factory will start its production in 2024 with an annual capacity of 10 GWh worth of battery cells. This amount will be enough for over 150,000 battery electric vehicles. Furthermore, Hyundai Motor Group and LG Energy Solution to invest USD 1.1 billion in the plant. Each company will share a 50% stake in the joint venture (JV). As a result, the battery cell JV will help Hyundai and Kia secure a stable supply of EV batteries.
Who is Hyundai?
According to its official page, Hyundai Motor Company was established in 1967. In fact, it has grown into the Hyundai Motor Group, which was ranked as the world’s fifth-largest automaker since 2007. The company includes over two dozen auto-related subsidiaries and affiliates.
Hyundai Motor, which exported its first independently-made vehicle, the Pony, in 1976. After that, the South Korean automotive giant exports over one million high-quality vehicles ranging from sedans, SUVs, trucks and buses.
Who is LG Energy Solutions?
LG Energy Solution leads the future eco-friendly energy industry by developing distinguished materials and next-generation batteries. In fact, the company is leading in the global lithium-ion battery market based on distinguished materials technology.
As a result, LG Energy Solution becomes a global powerhouse in the EV and energy storage system (ESS) battery sector. Thanks to its unparalleled technologies, the company is actively developing new products and procuring global battery production capacities.
Collaboration between South Korean companies
Many experts predict that both the EV and its battery market are growing rapidly. However, there are several problems to produce these products.
For example, raw materials including cobalt and nickel used for batteries are existing unevenly in the world. Therefore, the shortage of these raw materials can be a risk and it is natural that companies try to minimize it. Furthermore, the price of raw materials affects the price of batteries. As a result, it will have an impact on EVs in the end. In this sense, the collaboration between LG and Hyundai is reasonable.
Hyundai wants to increase the sales of EVs, but needs to reduce the cost of their production at the same time. LG has a strong expertise in EV batteries and wants to sell them to automotive manufacturers. What’s more, both companies have the same root in terms of nationality. When a company collaborate with a foreign company, cultural difference causes conflicts between them. Therefore, they can share value and custom better and faster.
On the other side, Indonesia government has already shown its intention to invest in EV batteries. Thus, from Indonesian government’s perspective, it is important for the country to invest in the field where it may win. It is the EV battery market because the country is the largest share with nickel reserves. As a result, Southeastern country can attract investments from outside the country.
In summary, from Hyundai, LG and Indonesian government’s perspective, each one has enough reason to invest. Thus, the next issue might be how to execute the plan and to realize their ideal goals.