Hyundai Motor lights up electric vehicle factory in Indonesia to shake up Japan’s automotive leadership in ASEAN

[Photo provided by Hyundai Motor Co.]

Hyundai Motor Co. has embarked on production of the Ioniq 5 at its new factory in Indonesia dedicated to electric vehicles as a gateway to the ASEAN market of more than 600 million people.

The South Korean car tycoon completed construction of the finished car plant with an initial production capacity of 150,000 units in Bekasi, Indonesia in December. It aims to roll out a total of 250,000 units per year from the factory which occupies a space of 777,000 square meters (192 acres). The Korean automaker has so far injected $1.55 billion for product development and plant operation since December 2019.

After months of delays due to Covid-19, the company finally held a groundbreaking ceremony on Wednesday, which was attended by company and local government officials, including Hyundai Motor Group Chairman Chung Euisun and the Indonesian President Joko Widodo.

The new plant in Indonesia has various engine, paint, press and body facilities for an integrated manufacturing and sales planning system. The highway in front of the plant extends to Jakarta, the Indonesian capital, while crossing the east and west of the island of Java, making it easier for the company to deliver finished cars everywhere inside and outside the country and to hire local talent.

To celebrate the opening, it launched production of its Ioniq 5 all-electric SUV built on its proprietary E-GMP EV platform on the same day, marking the first EV to be produced in Indonesia.

By fielding the Creta compact SUV and the Ioniq 5, Hyundai Motor aims to break the long-standing dominance of Japanese brands that account for 70 percent of car sales in the ASEAN market.

“Indonesia is a key hub for Hyundai Motor’s future mobility strategy,” Chung said. “This plant will play a key role in the development of electric vehicles, one of Indonesia’s future growth engines.”

President Widodo also praised the production of the Ioniq 5 as the first electric vehicle to be produced in the country, hoping that “Hyundai’s Ioniq 5 will become a milestone in the development of the electric vehicle ecosystem in Indonesia”.

Hyundai Motor sold a total of 605 Ioniq Electric and Kona Electric units in Indonesia last year, accounting for an 87 percent share of the country’s electric vehicle market.

Ioniq 5 vehicles will be provided for the upcoming G20 summit in Bali in November as an official vehicle along with Genesis G80 electrified cars.

Hyundai Motor plans to start production of the Santa FE SUV at the plant in the first half and the new compact multi-purpose vehicle model in the second half. EV manufacturers that meet the localization rate above 40% are subject to various government subsidies in Indonesia as well as zero tariffs in the ASEAN region.

Hyundai Motor Group is building a 10 GWh capacity battery cell plant in Indonesia as part of a $1.1 billion joint venture project with LG Energy Solution to power Hyundai’s new electric vehicle models and Kia built on E-GMP. This means that electric vehicles that will be produced from Hyundai Motor’s Indonesian plant will be eligible for more benefits from the Indonesian government and zero customs duties for exports to ASEAN countries, if they are equipped with batteries made from the JV factory of Hyundai and LG.

Indonesia is the largest auto market in the ASEAN region, with average annual sales of 1 million units from 2012 to 2018. Hyundai Motor has formed a separate team for the development of ASEAN target models to improve cooperation between the headquarters and the Indonesian operation from development to manufacturing.

Shares of Hyundai Motor were trading up 1.79% at 171,000 won in Seoul as of 10:29 a.m. Thursday.

By Seo Jin-woo and Lee Ha-yeon

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