Investigation Underway to Determine Cause of Fires
Hyundai Motor Co. and LG Chem have stopped promoting the planned establishment of an electric vehicle (EV) battery joint venture in Indonesia due to the recent series of Kona EV fires. The two companies reportedly planned to officially launch the joint venture at the end of 2020.
Although the two companies say that there had not been anything concrete about the establishment of the joint venture, observers say the Kona EV fires have affected their joint venture plans.
There is a subtle war of nerves between the two companies over who is responsible for the fires.
LG Chem's faulty manufacturing of battery cells and Hyundai Motor’s errors in setting up battery management systems are cited as the possible causes of the fires. Observers say that discussions on the battery joint venture can begin again only after it is determined what caused the fires.
Since the launch of the Kona EV in 2018, a total of 14 fires have broken out, including 10 in Korea and four overseas. The cause of the Kona EV fires is currently under investigation. The model is now being recalled. The investigation is being conducted jointly by the Ministry of Land, Infrastructure and Transport and the Korea Transportation Safety Authority.
Hyundai Motor and LG Chem have been discussing the launch of a battery joint venture in Java of Indonesia since 2019. The investment will amount to trillions of won. They preferred Indonesia because the Southeast Asian country is rich in nickel, cobalt and manganese, the key materials for EV batteries.
In addition, if Hyundai Motor produces EVs at its auto plant in the Deltamas Industrial Complex in Java, which is scheduled to start operations in December 2021, the carmaker will be able to prune logistics costs in shipping its cars to Indonesia and other neighboring countries.
The Indonesian government’s repeated requests for the two companies’ investment in Indonesia as part of its plan to make the country an EV industry hub in 2030 also played a role in the two companies’ decision to set up the joint venture in Indonesia.