WASHINGTON (Reuters) – The United States International Trade Commission (ITC) on Wednesday supported LG Chem Ltd, a South Korean electric and chemical battery manufacturer, which accused its rival SK Innovation Co Ltd of appropriating of trade secrets related to EV battery technology.
The ITC said it was issuing a 10-year limited exclusion order banning imports into the United States of some lithium-ion batteries by SK Innovation, but would allow SK to import components for the domestic production of lithium-ion batteries and other parts for the Ford Motor Co’s EV F-150 Program for four years, and for the Volkswagen of America MEB electric vehicle line for the North America region for two years.
The ITC added that SK Innovation can replace or repair its batteries in Kia vehicles sold to US consumers. The move could effectively ban the company from supplying EV batteries in the United States, unless the company can supply all the necessary materials there – a step that analysts say is not feasible.
The ITC said the decision would allow automakers to transition to new suppliers for these programs.
LG Energy Solution, a wholly owned battery subsidiary of LG Chem, an EV battery supplier for Tesla Inc and General Motors Co, praised the decision.
“SKI’s total disregard for our notices and intellectual property rights has given us another choice but to open this case,” said Kim Jong-hyun, CEO of LG Energy Solution, in a statement. He said the company would “further strengthen the protection of intellectual property rights going forward”.
SK Innovation, in a statement, said it regretted the ITC decision “but it is a relief that we will continue to provide Ford and Volkswagen”.
SK noted that there was a 60-day presidential review period in which President Joe Biden could decide to reverse the decision. Biden has made electric vehicles and reducing vehicle emissions a priority.
“We have serious concerns about the commercial and operational implications of this decision for the future of our EV battery facilities in Commerce, Georgia,” said SK in a separate statement, adding that he believes the “decision could have a serious adverse impact on the president. Biden’s policies to combat climate change and expand the electrification of the US car fleet in the coming years. “
A White House spokesman declined to comment on the decision.
An employee of LG Energy Solution, who declined to be named due to the delicacy of the matter, said the company was open to negotiations for an agreement with SK Innovation. If the two companies reach an agreement, the ITC case will be dismissed.
In February 2020, the ITC issued a preliminary decision in favor of LG Chem, which has since spun off its battery business as LG Energy Solution.
SK Innovation is building two EV battery factories in Georgia to manufacture batteries for us in Volkswagen and Ford electric vehicles. LG Chem set up an EV battery venture factory with GM in Ohio.
“With the final decision of the ITC, SK Innovation now faces scenarios in which it would not be able to operate its business in the United States, which is likely to accelerate settlement negotiations between LG and SK,” said Han Sang-won, an analyst from Daishin Securities, adding that SK Innovation needs to solve the process to better operate its EV battery business.
Ford said that “the ITC decision supports our plans to bring the all-electric Ford F-150 to the market in mid-2022.”
“We continue to analyze today’s decision by the US International Trade Commission and its impact on Volkswagen. Regardless, this decision does not alter our commitment to produce EVs in Chattanooga, TN, in 2022, ”said Volkswagen in a statement.
Volkswagen and Ford previously warned that a legal US dispute between South Korean battery manufacturers could disrupt the supply of major EV parts and cost jobs in the U.S. during the COVID-19 pandemic.
Reporting by David Shepardson in Washington and Heekyong Yang in Seoul; Editing by Chris Reese, David Gregorio and Gerry Doyle