Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
VW battery deal triggers LG-SK legal feud in US
A concept image of Volkswagen's electric minivan I.D. Buzz / Korea Times fille
By Baek Byung-yeul
By Baek Byung-yeul
LG Chem's recent lawsuit against SK Innovation has been triggered by a fierce competition for orders of batteries for electric vehicles (EVs) of Volkswagen, according to a lawsuit document, Sunday.
In a petition filed to the Delaware District Court in the United States on April 29, LG Chem claimed SK Innovation's win of Volkswagen's EV battery order has imposed restrictions on its lithium-ion battery business.
“SK Innovation's win of Volkswagen's U.S. market EV battery business significantly constrains LG Chem's ability to sell EV battery products to Volkswagen for the U.S. and makes it more difficult for LG Chem to partner with Volkswagen for the supply of EV battery products for the next generation of vehicles,” LG Chem said in its petition.
It added the value of the actual and potential customer contracts and associated revenue lost due to SK Innovation's “wrongful conduct” will exceed $1 billion.
Regarding the petition, an SK Innovation official said, “We don’t think we have to respond as what LG Chem claimed in the lawsuit is groundless.”
The official added, “Every contract order SK Innovation won including the contract that LG Chem mentioned in the lawsuit filed with the U.S. court was possible based on the company’s technological capabilities and management knowhow.”
For battery makers, Volkswagen is one of the biggest players in the market. LG said that Volkswagen's battery supply contracts for EVs have been estimated to amount to between $40 billion and $50 billion through 2025.
SK Innovation was selected as a battery cell supplier for EVs of Volkswagen Group in November, 2018. Under its goal to release 50 types of EVs by 2025, the German automaker signed the contract with SK Innovation as the firm is expected to need over 150 gigawatt hours (GWh) of battery per year by then.
After winning supply orders, SK Innovation also announced a construction plan for its EV battery manufacturing plant in the U.S. state of Georgia. The plant will have an annual battery production capacity of 20 GWh by 2025.
LG Chem said SK Innovation couldn't have won the orders from Volkswagen if the firm had not poached its employees who "knew and were so experienced in using LG Chem's trade secrets.”
“LG Chem is informed and believes that many of the former LG Chem employees had worked specifically on products and technologies concerning Volkswagen automobiles, one of LG Chem's key and emerging customers in the EV market, and its modular electric toolkit,” the firm said in a lawsuit.
“The Former LGC Employees had access to, were trained on, and routinely used LG Chem's trade secrets and other confidential information. Thus, they were central to the defendants' scheme to misappropriate LG Chem's trade secrets and inflict massive damage to LG Chem's business, including its customer relationships, sales campaigns and revenue generation,” it added.
The dispute between the local battery makers has become an issue since LG Chem said on April 30 that it had filed two lawsuits with the International Trade Commission (ITC) and a U.S. court against SK Innovation over the alleged theft of proprietary information through the hiring of former employees.
SK Innovation rebutted the claim that it has recruited employees through a transparent recruitment processes and said it had no reason to “steal” another firm's technologies as it has developed its own cutting-edge battery manufacturing technologies after investing trillions of won in R&D.