WASHINGTON – South Korean battery maker LG Chem and rival SK Innovation have agreed to settle a trade secret dispute that has threatened a key Georgia plant and electric vehicle plans from Ford Motor and Volkswagen.
The Biden administration by the US Trade Representative’s Office (USTR) faced a deadline on Sunday evening as to whether the rare step of withdrawing a decision by the US International Trade Commission (ITC) should be taken unless the companies agreed to an agreement. An announcement of the battery manufacturers’ deal is expected soon, the sources said.
The deal is a win for President Joe Biden, who has made the advancement of electric vehicles and US battery production a top priority. The global auto industry is racing to develop electric vehicles, and Biden has proposed spending $ 174 billion to increase EV sales and expand charging infrastructure.
ITC sided with LG Chem in February after the company accused SK Innovation of misusing trade secrets related to EV battery technology and imposing a 10-year import ban. However, SK Innovation has been able to import battery components for the Ford EV F-150 program for four years and Volkswagen’s North American electric vehicles for two years.
SK Innovation pledged to exit its $ 2.6 billion battery plant under construction in Georgia if the ITC decision is not overturned.
The ITC also criticized the so-called “tremendous wrongdoing” by SK Innovation and the destruction of documents by SK Innovation, which were ordered by executives of the company.
Ford, Volkswagen, LG Chem and SK Innovation declined to comment.
Scott Keogh, CEO of Volkswagen of America, wrote in a LinkedIn post on Wednesday that the ITC decision “could reduce US battery capacity and delay the transition to electric vehicles” if it were maintained.
LG Chem first filed a complaint against SK Innovation in 2019, and both sides hired numerous lawyers and consultants to report to the Biden administration.
The government has pushed the two companies, along with Volkswagen and Ford, to an agreement, the sources said.
The US sales representative Katherine Tai was personally involved in the settlement talks and asked both companies to find a solution. USTR declined to comment.
Georgia is home to two newly elected US Democratic Senators who are a lynchpin of Biden’s minor Congressional majority and who have both spoken about the importance of securing the future of the Georgia plant.
LG Chem’s battery unit, LG Chem Energy Solution, is about to complete a cell factory in Ohio with General Motors and is about to announce plans to build a second facility in Tennessee worth $ 2.3 billion, sources told Reuters.
LG Chem has stated that if SK Innovation closes its Georgia facility, it will meet automakers’ battery needs.
SK Innovation has denied this, stating that Chinese manufacturers could step in to meet demand.
Bloomberg reported the expected deal earlier on Saturday.
