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| The headquarters of LG Energy Solutions located in the LG Twin Tower in Yeouido, Seoul and the headquarters of SK Innovation in the SK Serene Building in Jongno-gu, Seoul. © News 1 |
As the US International Trade Commission (ITC) ruled in the final decision of a lawsuit for infringement of trade secrets between LG Energy Solutions and SK Innovation on the 10th (local time), attention is focused on whether the two companies will agree.
Volkswagen and Ford, which have decided to supply electric vehicle batteries from SK Innovation, are urging for an agreement between SK Innovation and LG Energy Solutions as it takes an emergency to secure alternative supply lines right away. The state of Georgia asked President Joe Biden to veto the ITC ruling, while citing the’possibility of agreement’.
According to Reuters on the 15th, Volkswagen requested the US government to extend the period to four years in a statement on the 12th (local time). In addition, Volkswagen urged an agreement between SK Innovation and LG Energy Solution’s two electric vehicle battery companies.
Volkswagen requested a voluntary agreement between the two companies, saying, “We have suffered unintended damage due to the dispute between SK Innovation and LG Energy Solution. Ultimately, we hope that SK Innovation and LG Energy Solution will resolve this dispute outside the court.”
Ford’s Chief Executive Officer Jim Parley also announced on Twitter on the 11th that he wanted an agreement, saying, “The agreement between the two companies will ultimately be in the best interests of US manufacturers and workers.”
On the 10th, ITC banned the import of SK Innovation’s electric vehicle batteries produced in the United States for 10 years in violation of the trade secrets of LG Energy Solutions on the 10th. Has been allowed.
However, considering that SK Innovation’s first plant in Georgia with a production scale of 9.8GWh can be mass-produced from the first quarter of 2022 and the second plant with a scale of 11.7GWh from the first quarter of 2023, in reality, these companies will only be able to supply batteries for one to two years. It seems possible.
SK Innovation plans to supply 200,000 batteries per year to the Volkswagen plant in Tennessee, USA starting in the first quarter of next year, which was expected to be installed in ID4. As the grace period for the ban on battery imports to Volkswagen is short, two years, it is expected that Volkswagen will be able to receive SK Innovation’s battery supply for practically one year.
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| Construction site of the first battery factory in Georgia, USA (provided by SK Innovation) © News1 |
The problem is that it will take about 4 years to find an alternative supplier of 200,000 units per year. This is because electric vehicle batteries are difficult to find replacement products in a short period of time as battery manufacturers and automakers have to cooperate for a long time from the initial stage of vehicle development. For Volkswagen, it is best at this time to receive SK Innovation’s batteries in any way, whether SK Innovation and LG Energy Solutions agree or extend the import allowance period.
Governor Brian Kemp of Georgia, where SK Innovation is building a large-scale battery factory for $2.6 billion (about KRW 2.87 trillion), also stated in a statement on the 11th (local time) that SK Innovation and LG Energy Solutions were Urged an agreement. Along with this, Governor Kemp asked President Biden to overturn the ITC’s ruling that issued an order to ban battery imports from SK Innovation.
“Unfortunately, the ITC’s ruling puts SK’s 2600 clean energy jobs and significant investments in innovative manufacturing at risk,” said Governor Kemp, concerned that the ITC’s decision could do a significant damage to an electric vehicle battery plant under construction in Jackson County, Georgia. I’m putting them in place,” he insisted.
In the Korean business community, considering the ITC’s ruling and the local atmosphere in the United States, the view that SK and LG will not agree in any way within the 60 days of the US presidential review period is dominant.
The decision of the US administrative agency, ITC, is subject to final approval by the President, which has a 60-day deliberation period. Past U.S. presidents have limited veto power only when they undermine the public interest or adversely affect the U.S. economy.
In this ruling, considering this, the reason for President Biden’s veto is weakened as the batteries supplied to Ford and Volkswagen have some grace period. As the prevailing LG Energy Solution puts it in a more favorable position, some analysis suggests that SK Innovation, which has become urgent, can rush to an agreement. Even before the ITC ruling, the two companies had negotiated under the water, but LG presented trillions of won and SK’s hundreds of billions of won as settlement funds.
A business official said, “As Prime Minister Jeong Sye-gyun urged an agreement to’make men only do good things. Let’s solve it quickly.’ Considering the domestic and international atmosphere, the agreement could quickly rise with this ITC decision.” “There is a view that there is a possibility that this battery dispute may be concluded before the inauguration of the president of the Korea Chamber of Commerce next month, conscious of the eyes of both inside and outside the business world.”