A consortium led by LG is said to have canceled its investment in an EV battery supply chain project in Indonesia.

The project, valued at 11 trillion won (US$7.76 billion), was announced on April 18, 2025, in South Korea.

The consortium includes LG Energy Solution, LG Chem, and LX International Corp.

They cited market conditions and the investment environment as reasons for their withdrawal.

“Considering market conditions and the investment environment, we have decided to exit the project,” an LG Energy Solution official said on April 20.

🔗 Source: CNN Indonesia

🧠 Food for thought

1️⃣ Global EV market slowdown forces strategic investment recalibrations

LG’s withdrawal from the $7.7 billion Indonesia battery project highlights a significant industry-wide reassessment happening in the EV supply chain.

The consortium specifically cited the “EV chasm,” industry terminology for the current global slowdown in electric vehicle demand, as a primary factor in their decision to withdraw from this major investment commitment.

This pullback is part of a broader trend where battery manufacturers are becoming increasingly selective with their capital expenditures, carefully evaluating which projects to pursue in response to market uncertainties.

Despite continued long-term growth projections for EVs, manufacturers are adopting more cautious investment approaches, prioritizing flexibility over the aggressive capacity expansion strategies that dominated the industry in recent years.

The strategic shift demonstrates how battery makers are balancing maintaining competitive positioning for the future with protecting against short-term market volatility.

2️⃣ Indonesia’s natural resources advantage remains despite investment setback

Indonesia’s position as the world’s largest nickel producer, accounting for approximately 37% of global production, remains a crucial strategic advantage in the battery supply chain despite this specific investment withdrawal.

The country’s abundant nickel reserves, essential for lithium-ion battery production, continue to make it a natural hub for battery manufacturing regardless of this particular project cancellation.