This is the reason why LG failed to invest in nickel battery projects in Indonesia
Lidahtekno, Jakarta — Chairman of the PAN Advisory Board, Dradjad Wibowo, stated that the LG consortium from South Korea decided to withdraw from the integrated nickel battery project in Indonesia. The decision was taken because of concerns about potential financial losses.
LG was initially enthusiastic about investing
Dradjad revealed that at first, the Indonesian government invited LG to participate in this large project, which includes the entire supply chain of electric vehicles (electric vehicles). LG even stated its commitment to invest around 2 billion US dollars.
At that time, Hyundai was in need of a battery for the IONIQ Electric electric car line, and LG was ready to support the provision of the necessary components.
“They have fulfilled all the rules, the TKDN is also in accordance. So administratively there is no problem,” said Dradjad when met at the Senayan Parliament Complex, Central Jakarta, Thursday (24/4/2025).
Price Challenge and Market Competition
After taking into account production costs in Indonesia, it is estimated that the price of IONIQ electric cars will be in the range of Rp. 700-800 million. However, this price is considered too high when compared to a competitor from China, BYD Auto Co. Ltd.
BYD was unable to export its products to Europe due to trade disputes, so the company chose to divert the market to other countries, including Indonesia. The Indonesian government then provided a number of facilities that made the price of BYD products much cheaper.
“Yes, automatically IONIQ can’t compete. The price is 50%-60% more expensive than BYD even though the specifications are similar. So, how can you compete?” said Dradjad, who is also a member of the Expert Council of the Prabowo-Gibran Winning Team in the 2024 Presidential Election.
As a result of these different treatments, market interest in IONIQ decreased, and LG also reviewed its investment strategy.
“LG is reconsidering because the market is down and they feel they are not being treated fairly compared to companies from China,” added Dradjad.
Inequality of treatment between foreign investors
As a senior economist from INDEF, Dradjad assessed that there was an imbalance in the treatment of foreign investors. According to him, companies from South Korea such as LG have not received equal treatment from companies from China, which are influenced by certain political factors.
“In the future, there should be no such special treatment,” he said.
Titan’s Big Investment Scheme
To note, LG is participating in the Titan project with the BUMN Indonesia Battery Corporation (IBC) consortium. LG’s investment commitments reached US$9.8 billion or around Rp142 trillion, which includes:
US$850 Million Nickel Mining
Construction of a High Pressure Acid Leaching (HPAL) Smelter Worth US$4 Billion
Precursor/Kathode Factory Worth US$1.8 Billion
Battery Cell Production Facility Worth US$3.2 Billion
As of February 2025, IBC, which is part of the Mind ID, PLN, Pertamina, and Antam, stated that the relationship with LG is still in the feasibility study stage.
The government pushes LG backwards
However, the latest development states that LG has decided to cancel its investment in Indonesia. The Minister of Investment and Downstream/Head of BKPM, Rosan Roeslani, revealed that LG did not go voluntarily.
“The government is pushing LG out of the project because talks with them are tough,” said Rosan, Wednesday (23/4/2025).
He added that large-scale projects like this do require a long negotiation process. The government remains committed to the national electric battery project to continue and will look for new partners to continue.
