South Korean carmaker Hyundai Motor Group opened its first Southeast Asian manufacturing plant in Indonesia on Wednesday, gearing up its drive to expand its presence in a region long dominated by Japanese rivals. 

The plant, located in the Deltamas industrial complex 40 kilometers east of the capital city of Jakarta, has started mass production of Hyundai's flagship electric vehicle Ioniq 5, the first EV to be manufactured in the country, the carmaker said. It plans to invest 1.92 trillion won ($1.55 billion) in the plant to manufacture 250,000 units a year.

“Indonesia is a key hub for Hyundai Motor’s future mobility strategy. This plant will play a key role in the automotive industry and specifically in the field of electric vehicles,” said Hyundai Motor Group Chairman Chung Euisun at the opening ceremony.

“Moreover, Hyundai will keep contributing to the establishment of the electric vehicle ecosystem in Indonesia through synergies with the battery plant that we are currently developing. This will boost Indonesia to play an important role in the global landscape. We hope that future new technologies from Hyundai will be the foundation of greater collaboration with Indonesia,” Chung added. 

Attending the opening ceremony, Indonesian President Joko Widodo also said that the plant will become a manufacturing hub to realize the Southeast Asian country’s EV ambition. 

“I hope that this Ioniq 5 from Hyundai will become an important milestone in the development of Indonesia’s electric vehicle ecosystem, and to further accelerate the electric car ecosystem that is more advance,“ he said.

The list of top government officials included Coordinating Minister of Maritime and Investment Luhut Binsar Panjaitan, Coordinating Minister of Economic Affairs Airlangga Hartarto, Minister of Investment Bahlil Lahadalia, Minister of Transportation Budi Karya, Minister of State-Owned Enterprises Erick Thohir, State Secretary Pratikno and Korean Ambassador to Indonesia Park Tae-sung.

The Indonesian plant is also the automaker’s all-in-one hub where multiple processes from engine building to painting, press, vehicle body manufacturing and innovative research will be conducted, according to the carmaker. 

Given the strength of the plant’s location, where shipping to neighboring countries is easy, Hyundai Motor said it will produce exclusive EV models for the region to lead sales in the Southeast Asian market with a population of 6 million. About 70 percent of the automotive sales in the region has been led by Japanese carmakers.

Last year, Hyundai Motor sold a total of 6.05 million Ioniq Electric and Kona Electric in Indonesia, taking the lion’s share of 87 percent in the local EV market.

Besides, popular models like Santa Fe and other small multi-purpose vehicles (MPV) will be manufactured within this year in addition to the mid-sized SUV Creta, which had already been in production since January.

The carmaker said also leveraging on 100 dealerships across 40 cities throughout Indonesia, Hyundai Motor will develop strategic catering to the local market’s needs, as well as collaborating with local partners to set up training activities to exchange knowledge and technology. 

Vehicles will be sold under a build-to-order (BTO) scheme, allowing customers to choose product specifications when ordering them. It plans to launch a click-to-buy online platform service as well.

To secure a stable supply of battery cells, Hyundai Motor has forged a partnership with fellow South Korean company LG Energy Solutions to build a battery plant also in the Southeast Asian country. LG’s battery plant is set to start manufacturing in 2024. 

Indonesia has a population of 273 million and is the world’s 14th largest automotive manufacturing market.