Government's Move to Oust LG from EV Battery Project Deemed Appropriate

KatadataOTO – The government has finally explained the reason for the departure of LG Energy Solution (LGES) from the Electric Vehicle (EV) battery project in Indonesia.

It turns out the Ministry of Energy and Mineral Resources (ESDM) was the one that removed LG from the project. This also clarifies the circulating news.

“This was based on a letter from the Ministry of ESDM dated January 31, 2025, because the negotiation (process) had been going on for too long,” said Rosan Roeslani, Minister of Investment and Downstreaming, as previously reported by Katadata.

According to Rosan, the negotiation process had been ongoing for five years. However, the two parties had not yet reached an agreement or satisfactory progress.

Photo : Yonhap

“Meanwhile, the government wants everything to proceed well and quickly (the EV battery project),” Rosan continued.

Meanwhile, after the departure of LG Energy Solution from the country, the government has partnered with a battery manufacturer and metal processor from China, namely Huayou.

On the other hand, many people regret this government decision. It is seen as potentially disrupting the growth of the electric vehicle ecosystem in the country.

However, some also argue that the government's move to remove LG and replace it with Huayou was the right decision.

“The government's swift move to partner with Huayou as a replacement shows decisiveness and adaptability in maintaining the capability of strategic projects,” said Yannes Martinus Pasaribu, an automotive expert and academic from ITB (Bandung Institute of Technology) to KatadataOTO, on Friday (25/04).

Yannes explained that Huayou has a strong track record in the global battery industry. And is committed to building an integrated supply chain in Indonesia.

Starting from domestic nickel processing to producing battery cells for electric vehicles.

“Huayou, which now leads the Titan Project consortium, seems ready to build a supply chain from upstream to downstream,” said Yannes.

He also believes that Huayou's arrival to replace LG in the electric vehicle battery project will actually allow the EV ecosystem in the country to continue to grow.

Photo : Courtesy

“So far, the government seems to be responsive. What is happening now is just an adjustment of cooperation partners,” Yannes asserted.

He also revealed that LG's continued presence through HLI Green Power with Hyundai shows that investing in Indonesia is still very attractive.

“They are still carrying out battery production in Karawang. So the EV ecosystem (in the country) continues to grow,” Yannes concluded.