Hyundai Motor Group has signed a cooperation agreement with Zhejiang Huayou Recycling Technology to jointly establish a battery recycling system for electric vehicles in Indonesia.

The collaboration covers the recycling and reuse of battery manufacturing waste and end-of-life batteries, with the aim of creating a closed-loop resource system throughout the battery lifecycle.

Indonesia, the world's largest nickel producer, is shifting from a raw material exporter towards electric vehicle (EV) battery production. According to the Indonesian government's plan, by 2030 the country is expected to reach a total EV battery production capacity of 100 GWh and produce approximately 600,000 all-electric vehicles annually.

The HLI Green Power battery plant, jointly established by Hyundai Motor Group and LG Energy Solution in Indonesia, is part of this plan. Located in Karawang, West Java, the plant involves a total investment of US$ 1.1 billion and is scheduled to begin operations in 2024.

It will have an annual production capacity of 10 GWh and can supply battery cells for more than 150,000 electric vehicles. The facility is intended to support Hyundai Motor Group's electric vehicle models in Southeast Asia, India, and other markets.

The expansion of battery production capacity has increased challenges related to the management of end-of-life batteries and production waste. The Indonesian Battery Association estimates that by 2030 the country's volume of end-of-life energy batteries will reach 120,000 metric tons.

Existing recycling systems face limitations, including insufficient processing capacity, a lack of technical standards, and the dominance of informal recycling channels, which account for more than 70% of operations. In the outskirts of Jakarta, the presence of multiple open-pit lithium acid extraction sites has resulted in soil heavy metal levels exceeding European Union limits by up to 50 times.

The collaboration has several implications for Indonesia's battery industry and the Southeast Asian region:

- Domestic industrial chain development: Through new energy legislation, the Indonesian government has designated electric vehicles as a national strategic industry and requires foreign automakers to establish battery production facilities in the country, with a target of achieving a 40% domestic sourcing ratio by 2027. The collaboration between Hyundai Motor Group and Huayou Recycling contributes to the development of an industrial chain covering mineral extraction, battery manufacturing, and recycling.

- Resource considerations: Indonesia has substantial nickel reserves, but domestic cobalt production is limited, and lithium supplies depend on imports from Australia. Battery recycling may reduce reliance on imported minerals and support resource availability.

- Investment environment: The Indonesian government has introduced fiscal incentives, including zero import duties, exemptions from luxury goods sales tax, and a reduction in value-added tax from 11% to 1%, to attract foreign investment in the battery sector. The collaboration between Hyundai Motor Group and Huayou Recycling reflects broader developments in battery recycling and circular economy practices. As the electric vehicle market expands, battery recycling is increasingly linked to resource management and economic factors.