Hyundai to open car plant in Indonesia, to build EVs: minister

[December 20, 2018]   JAKARTA (Reuters) - Hyundai Motor Co <005380.KS> plans to start producing electric vehicles (EVs) in Indonesia as part of an around $880 million auto investment in the country, Industry Deputy Minister Harjanto said on Thursday.

The Korean company, which together with affiliate Kia Motors <000270.KS> is the world's No.5 automaker, plans to build a factory in Indonesia with a capacity of around 250,000 units, including for electric cars, Harjanto told Reuters.

Indonesia has ample reserves of nickel laterite ore, a vital ingredient for the lithium-ion batteries used to power EVs.

The minister noted the plan was to export 53 percent of the cars manufactured in the proposed Hyundai plant, mostly to Southeast Asia and Australia, while the remaining 47 percent would be for the domestic market.

Hyundai's move to set up a plant in Indonesia comes at a time when the carmaker is trying to cut its reliance on China, its biggest market, where it and Kia are reeling from a weak recovery in sales after a diplomatic row between Seoul and Beijing and facing tough competition from local rivals.

Reuters reported in August that Hyundai and Kia were considering shipping Chinese-made vehicles to Southeast Asia to address its weak sales and its excess capacity.

The Hyundai logo is seen during the first press day of the Paris auto show, in Paris, France, October 2, 2018. REUTERS/Regis Duvignau/File Photo

Hyundai does not have a car making factory in Southeast Asia, although it has some pure assembly operations in Vietnam.

A Hyundai spokeswoman said they "did not have immediate comments" about the company's Indonesia plans.

Separately, Hyundai-Kia's think tank vice president Lee Bo Sung said on Thursday the ASEAN market has growth potential, but that it is difficult to "penetrate" as it is dominated by Japanese rivals such as Toyota <7203.T> and Honda <7267.T>.

Last month, Hyundai announced an $250 million investment in Singapore's ride-hailing firm Grab and a plan to offer EVs to Grab drivers in Southeast Asia.

(Reporting by Cindy Silviana and Fanny Potkin in Jakarta and Hyunjoo Jin in Seoul; Editing by Himani Sarkar)

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