Two South Korean electric vehicle (EV) battery makers reached a last-minute settlement in a bitter US trade dispute, sparing US President Joe Biden from choosing between undermining intellectual property rights or dealing a politically toxic blow to his climate agenda.
SK Innovation Co agreed to pay 2 trillion won (US$1.78 billion) to LG Energy Solution, a unit of LG Chem Ltd, a statement from the two companies said.
The payment is divided equally in cash and royalties, they said.
Photo: AP
The two companies “will work to help the development of the EV battery industry in South Korea and the US through healthy competition and friendly cooperation,” the joint statement said.
“In particular, we will work together to strengthen the battery network and environmentally friendly policy that the Biden administration is pursuing,” it added.
The settlement would avert a 10-year ban against the importation of SK Innovation’s batteries into the US and ends a two-year dispute between the companies.
The import ban threatened to complicate the rollout of Ford Motor Co’s new F-150 electric pickup truck and the Volkswagen AG’s ID.4 sports utility vehicle, both due to begin production next year with EV batteries assembled at an SK Innovation plant in politically important Georgia.
The dispute became a political conundrum for Biden because it was said to jeopardize as many as 6,000 battery manufacturing jobs in Georgia, prompting the state’s two Democratic senators and its Republican governor to urge an intervention from the president.
One of the senators faces re-election next year.
SK and LG also agreed to withdraw all lawsuits lodged in South Korea and overseas, the statement said, as well as agreeing not to undertake any legal action against each other for the next 10 years.
The settlement removes a major headache for South Korean and US government officials, who have spent weeks pressing the two sides to reach an agreement.
Biden was facing an April 11 deadline to decide whether to overturn the import ban, or do nothing and let it take effect.
The US International Trade Commission (ITC), an independent agency set up to protect US markets from unfair trade practices, had issued the import ban on Feb. 10, based on what it called an “extraordinary” effort by SK Innovation to destroy evidence in a trade-secret case lodged by LG Energy.
The ITC did carve out time to let SK Innovation import components for batteries to be assembled in Georgia for Ford and Volkswagen vehicles, but the automakers said that it was not enough.
“A voluntary settlement between these two suppliers is ultimately in the best interest of US manufacturers and workers,” Ford chief executive officer Jim Farley wrote on Twitter after the ITC’s decision in February.
LG Energy had accused SK Innovation of stealing billions of dollars of crucial information on how to make batteries, enabling it to win the contracts from Ford and Volkswagen.
SK Innovation denied receiving or using any confidential information from the LG Energy employees that it had hired.
SK Innovation is nearing completion of one facility in Commerce, Georgia, and is making battery samples, while a second facility is about 20 percent complete and projected to be done next year.
A second phase is planned that would bring SK Innovation’s total investment to about US$5 billion and create 6,000 jobs, the company has said.
In addition to making the batteries for Ford and Volkswagen, the SK Innovation facility would be the nation’s largest so-called non-captive plant, meaning that it could reconfigure itself for other manufacturers, the company has said.
LG, which is building an additional plant with General Motors Co in Ohio in addition to its facility in Holland, Michigan, has announced plans to invest US$4.5 billion in the US by 2025 and hire 10,000 workers to expand battery capacity.
Creating more US-based manufacturing is critical because the automakers want components close to their assembly plants, especially since a shortage of computer chips has highlighted vulnerabilities for global supply chains.
The supply of batteries for a coming wave of electric models is also extremely tight.
Biden has committed to creating more US manufacturing, particularly to compete with China.
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