LG Energy Solution’s withdrawal from a major Indonesian EV battery joint venture exposes vulnerabilities in Southeast Asia’s green transition, with Chinese firms like Huayou Cobalt filling the void amid US-China tech tensions.
South Korea’s retreat from a landmark $8.45 billion battery project in Indonesia’s nickel-rich Halmahera region signals shifting power dynamics in Asia’s clean energy race, with Chinese players capitalizing on Western trade barriers.
Strategic Withdrawal Shakes Regional Battery Plans
LG Energy Solution confirmed its exit from the Indonesia Battery Corporation (IBC) joint venture on 15 June 2024, abandoning what was touted as Southeast Asia’s largest integrated EV battery production complex. The project, originally targeting 200 GWh annual capacity by 2027, stalled over technology transfer disagreements and rising capital costs.
Huayou’s Nickel Dominance Meets Geopolitical Realities
China’s Huayou Cobalt, already operating Indonesia’s largest nickel processing facility through PT QMB New Energy Materials, is negotiating to acquire LG’s stake according to Digitimes. The Zhejiang-based firm supplies battery-grade nickel to CATL and Tesla from its Indonesian operations, which processed 120,000 tonnes of nickel equivalent in 2023.
Decoupling Dynamics Reshape Supply Chains
‘This is textbook tech decoupling,’ said Wood Mackenzie analyst Max Reid. ‘US tariffs pushing Chinese firms to localize ASEAN production, while South Korean players retreat to domestic R&D hubs.’ The 25% US tariff on Chinese lithium-ion batteries, effective August 2024, makes Indonesian-made batteries crucial for tariff-free EU exports.
Historical Parallels and Future Risks
Indonesia’s current predicament mirrors China’s 2010s solar panel boom, where foreign technology transfers enabled domestic dominance. The IBC’s cathode plant delay (20 June 2024) reveals similar growing pains. Meanwhile, Europe’s Critical Raw Materials Act faces comparable challenges in reducing Chinese battery material dependence, with only 3% of EU lithium currently sourced domestically.
