By Kim Bo-eun
SK Innovation (SKI) has agreed to pay 2 trillion won ($1.78 billion) to settle its battery dispute with local rival LG Energy Solution (LGES) in a last-minute settlement that will allow SK to avert a 10-year import ban ruling by the U.S. International Trade Commission (USITC).
The two companies said Sunday that they also agreed to drop all lawsuits filed both here and abroad, and pledged not to lodge any additional suits over the next decade. Of the 2 trillion won in settlement money, 1 trillion won will be paid over the next two years while the remaining 1 trillion won will be delivered in royalties.
The compromise, which came ahead of an April 11 deadline for the White House to veto a USITC ruling, ended a two-year legal battle between the two Korean battery makers that was initiated by LG Chem in April, 2019. LG Chem spun off LGES in December, 2020.
Biden welcomed the settlement in a statement, Sunday. "This settlement agreement is a win for American workers and the American auto industry," the statement said.
The USITC ruled in February that SKI stole trade secrets from LG's EV battery making unit by poaching its employees. The ruling imposed a 10-year import ban of battery components into the U.S. on SKI, but allowed temporary permits for Ford and Volkswagen to use its batteries and components until they found new vendors.
"The agreement reflects LGES' willingness to engage in fair competition and coexist (with competitors) and it is meaningful in that (LGES') intellectual property was recognized," LG said in a statement.
"Based on this agreement major clients including Volkswagen and Ford have acquired a stable supply of batteries in the global market, and SKI's Georgia plant will be able to operate, enabling both companies to coexist in the global market and compete in good faith."
SKI stated "SKI has come to bear greater responsibility in the U.S. government's environmental policies, the growth of the state of Georgia's economy and the creation of jobs, with regards to this dispute."
"We plan to focus on launching operations of our first plant in Georgia and accelerate the construction of the second while making additional investments both here and abroad to enable the development of the global EV industry and the creation of an ecosystem."
The two battery makers had earlier failed to settle their dispute due to differences over settlement money. LGES is known to have called for 3 trillion won, while SKI had been willing to offer only 1 trillion won.
The settlement overrides the USITC import ban and enables SKI to go forward with building its 2.91 trillion won ($2.6 billion) plant in Georgia, which will supply batteries to Ford and Volkswagen. SKI is seeking to build two plants in Georgia by 2024 that would produce batteries for 300,000 EVs annually. The plants will employ 2,600 workers, according to reports.
Earlier, Georgia Governor Brian Kemp requested U.S. President Joe Biden to exercise a veto over the USITC ruling, citing the job losses that would occur if the plants were scrapped.
While both companies declined to comment, SKI is seen to have reached out to LGES, as it appeared the White House did not intend to reverse the USITC ruling.
On policy grounds, the U.S. president would have been able to exercise a veto within 60 days of the Feb. 10 ruling. There has only been one preceding case of the White House exercising a veto on an ITC ruling so far, which was not on the theft of trade secrets.
The governments of the U.S. and Korea are known to have pressured the companies to reach a settlement.
Reaching a decision on USITC's ruling would have been tough for the White House, as setting up a supply chain for EVs is crucial amid the government's environmental push, but it could not advocate intellectual property theft.
Meanwhile, South Korea's Prime Minister Chung Sye-kyun also urged the battery makers to reach a settlement, stressing their battle was benefitting their rivals, and costing them hundreds of billions of won in legal expenses.
SKI had focused on lobbying the Biden administration to opt for the veto by reaching out to former U.S. government officials. The battery maker earlier this year appointed former Deputy Attorney General Sally Yates and former Environmental Protection Agency Administrator Carol Browner as advisors to the company.
With a market share of 23 percent, LGES is competing with China's CATL for the top player spot in the global EV battery market. SKI, as a late entrant into the market, ranks around fifth with a market share of around 5 percent.
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| LG and SK groups' corporate images / Korea Times file |
The two companies said Sunday that they also agreed to drop all lawsuits filed both here and abroad, and pledged not to lodge any additional suits over the next decade. Of the 2 trillion won in settlement money, 1 trillion won will be paid over the next two years while the remaining 1 trillion won will be delivered in royalties.
The compromise, which came ahead of an April 11 deadline for the White House to veto a USITC ruling, ended a two-year legal battle between the two Korean battery makers that was initiated by LG Chem in April, 2019. LG Chem spun off LGES in December, 2020.
Biden welcomed the settlement in a statement, Sunday. "This settlement agreement is a win for American workers and the American auto industry," the statement said.
The USITC ruled in February that SKI stole trade secrets from LG's EV battery making unit by poaching its employees. The ruling imposed a 10-year import ban of battery components into the U.S. on SKI, but allowed temporary permits for Ford and Volkswagen to use its batteries and components until they found new vendors.
"The agreement reflects LGES' willingness to engage in fair competition and coexist (with competitors) and it is meaningful in that (LGES') intellectual property was recognized," LG said in a statement.
"Based on this agreement major clients including Volkswagen and Ford have acquired a stable supply of batteries in the global market, and SKI's Georgia plant will be able to operate, enabling both companies to coexist in the global market and compete in good faith."
SKI stated "SKI has come to bear greater responsibility in the U.S. government's environmental policies, the growth of the state of Georgia's economy and the creation of jobs, with regards to this dispute."
"We plan to focus on launching operations of our first plant in Georgia and accelerate the construction of the second while making additional investments both here and abroad to enable the development of the global EV industry and the creation of an ecosystem."
The two battery makers had earlier failed to settle their dispute due to differences over settlement money. LGES is known to have called for 3 trillion won, while SKI had been willing to offer only 1 trillion won.
The settlement overrides the USITC import ban and enables SKI to go forward with building its 2.91 trillion won ($2.6 billion) plant in Georgia, which will supply batteries to Ford and Volkswagen. SKI is seeking to build two plants in Georgia by 2024 that would produce batteries for 300,000 EVs annually. The plants will employ 2,600 workers, according to reports.
Earlier, Georgia Governor Brian Kemp requested U.S. President Joe Biden to exercise a veto over the USITC ruling, citing the job losses that would occur if the plants were scrapped.
While both companies declined to comment, SKI is seen to have reached out to LGES, as it appeared the White House did not intend to reverse the USITC ruling.
On policy grounds, the U.S. president would have been able to exercise a veto within 60 days of the Feb. 10 ruling. There has only been one preceding case of the White House exercising a veto on an ITC ruling so far, which was not on the theft of trade secrets.
 |
| The construction site of SK Innovation's battery plant in the U.S. state of Georgia / Courtesy of SK Innovation |
The governments of the U.S. and Korea are known to have pressured the companies to reach a settlement.
Reaching a decision on USITC's ruling would have been tough for the White House, as setting up a supply chain for EVs is crucial amid the government's environmental push, but it could not advocate intellectual property theft.
Meanwhile, South Korea's Prime Minister Chung Sye-kyun also urged the battery makers to reach a settlement, stressing their battle was benefitting their rivals, and costing them hundreds of billions of won in legal expenses.
SKI had focused on lobbying the Biden administration to opt for the veto by reaching out to former U.S. government officials. The battery maker earlier this year appointed former Deputy Attorney General Sally Yates and former Environmental Protection Agency Administrator Carol Browner as advisors to the company.
With a market share of 23 percent, LGES is competing with China's CATL for the top player spot in the global EV battery market. SKI, as a late entrant into the market, ranks around fifth with a market share of around 5 percent.
