Jockeying for Position
Korea and China are set to compete in the battery industry in Southeast Asia with high growth potential. Korean companies are investing heavily in Indonesia, Thailand, Malaysia, and Vietnam, the four largest electric vehicle markets in Southeast Asia. China, which has been blocked from entering North America, is also moving to make Southeast Asia its new overseas base after Europe. This explains why Korean and Chinese battery makers are expected to have a neck-and-neck race in Southeast Asia.
In the automobile market, Southeast Asia is a key region that constitutes the Asia-Pacific market along with India and Australia, according to industry sources on July 9. It ranks fourth in the world after the United States, China, and EMEA. In particular, Indonesia, which has the largest reserves of nickel, one of the key minerals for batteries, is moving to build production facilities for electric vehicles, and battery makers also invested in the country one after another.
Among Korean companies, LG Energy Solution has taken the charge. It has established a battery joint venture (JV) with Hyundai Motor in Indonesia. The 10 GWh facility will be completed by the end of 2023 and will begin the volume production of batteries next year. Its capacity will be expanded to 30 GWh in the future. It took the initiative in forming LG Consortium in which LG Chem, LX International, POSCO Holdings, and Huayou participated and began to invest in an Indonesian value chain in earnest. Its plan is to invest 12.3 trillion won to foster Indonesia as the center of the electric vehicle industry in Southeast Asia.
Samsung SDI will continue to invest in its Malaysian factory where small batteries for power tools and household appliances have been produced. It will establish a second plant in Seremban to ramp up production of cylindrical batteries for electric vehicles.
SK nexilis’ and Lotte Energy Materials’ investment in copper foil will be made and Sungil High Tech’s base for its waste battery business will be built in Southeast Asia. LG Energy Solution and SK nexilis will also strengthen cooperation with Vinfast, the only electric vehicle manufacturer in Southeast Asia.
As for Chinese battery makers, CATL agreed to establish a batch production system for a value chain of minerals, materials, and batteries with an Indonesian state-run company. Recently, it agreed to cooperate in the cell-pack business with a battery subsidiary established by Thailand’s Arun Plus. BYD is also making active moves. It is building a battery factory in Thailand with the goal of beginning to run it next year. BYD, which produces both EVs and batteries, plans to produce 150,000 EVs a year and produce batteries on its own.
Rich in nickel and lithium, Indonesia has newly enacted a law restricting the export of battery minerals from the country and has attracted investment in electric vehicles from Korean and Japanese automakers. In Thailand, where Japanese automakers have production bases, a move for electrification has also spurred the entry of battery makers. In Malaysia, where water is abundant, battery companies that consume large amounts of water have set up their production bases. Vietnam’s importance has also increased due to the influence of Vinpast, the first Southeast Asian company to start producing electric vehicles.
“In countries like Indonesia where LG Consortium and CATL compete, there is no technology for the entire value chain, from mineral mining and smelting to materials, batteries and electric vehicles, so many companies are trying to enter those markets in advance to maximize profits,” said an industry insider. “Japanese automakers are still highly influential in Southeast Asia, so in the future, there may be a three-way race between Korea, China, and Japan for the Southeast Asian electrification market.”