As worldwide electric vehicle (EV) demand grows, automotive manufacturers Volvo and Hyundai are opening new EV manufacturing facilities in Indonesia and Malaysia. The moves come as Indonesia and Malaysia compete to become the region’s hub for EV production. The two companies are also investing in joint ventures with other companies to produce EV batteries.
Techwire Asia reported that Hyundai’s Indonesian venture is the first EV plant in the country, beating such industry leaders as Tesla, which has often been courted by the Indonesian government to set up a plant. The company announced plans to build the factory in December 2021. The manufacturing facility will produce the Ioniq 5, which is its newest entry into the EV market. The company’s goal is for the facility to produce 250,000 vehicles a year. In addition, Hyundai and its fellow Korean manufacturer LG have started construction on an EV battery plant last September 2021, tapping into Indonesia’s mineral resources. These include nickel, cobalt, bauxite and copper, which are among the raw materials for batteries.
Meanwhile, Swedish car manufacturer Volvo is continuing its EV push by opening a plant in Selangor, Malaysia. The company, which is now owned by the Chinese holdings firm Geely, announced that it would initially produce the XC40 Recharge Pure Electric model and subsequently other models as well. This move is in line with Volvo’s goal to exclusively produce EVs by 2030, which kicked off with the conversion of its historic Swedish plant to EV production. Volvo, like Hyundai, plans to work with other companies to expand its EV battery production as well. Together with their partner Northvolt, they are hoping to set up EV battery manufacturing facilities in the US and Asia, but no concrete plans are in place yet.
The two companies are taking advantage of what they see as increased demand in Southeast Asia for EVs, shifting attention away from a slowing Chinese market. For instance, Hyundai has dominated the EV market in Indonesia, holding an 87.3% market share. Both companies are attracted by government commitments to EV industry growth. Indonesia has undertaken to expand EV production to 2,400,000 vehicles a year by 2025 as part of its zero-emissions targets. Malaysia, on the other hand, wants to become a key player in the EV manufacturing world, tapping into its third-largest industry to achieve that goal.
Hyundai and Volvo’s ventures signal their seriousness in engaging with a massive and still growing EV industry. According to Fortune Business Insights, the EV industry was worth US$287.36 billion at the end of 2021 and is set to accelerate its growth to US$1.3 trillion by 2030. Despite a slowdown caused by the pandemic, their report argues that a combination of government incentives and tightened emissions rules is stimulating industry growth. It is also worth noting that rising fuel costs, exemplified by the current (March 2022) surge caused by the Russia-Ukraine crisis, are also likely to spawn EV demand in the next few years.
The main challenge facing the industry, however, is manufacturing capacity. With Volvo and Hyundai’s recent moves, and the support of their plants’ host countries, this challenge may be well on its way to being met in the coming years.
Hyundai inaugurated a new electric vehicle (EV) plant in Indonesia, aiming to produce the first-ever locally produced EV, the Ioniq 5.
Volvo is opening an EV plant in Malaysia as part of its moves to shift production entirely to such vehicles by 2030.
The two companies are expanding their presence in an increasingly growing market for EVs, with the industry set to be worth over a trillion U.S. dollars by 2030.