Two South Korean manufacturers of electric vehicle batteries building plants in the United States said on Sunday that they had reached a $ 1.8 billion settlement in a trade secret dispute that threatened the domestic battery supply and with it the green agenda of the Biden government.
The announcement comes on the day of a deadline set by the United States Trade Representative to decide whether to veto a ruling by the International Trade Commission in the intellectual property case between LG Energy Solution and SK Innovation. The commission’s ruling in favor of LG threatened SK with a ban on supplying batteries in the country and endangered its factory in Georgia.
The plant, which is still under construction, will supply batteries for electric vehicles for Ford and Volkswagen, and with the settlement agreement, SK is now also free to ask for business from other companies.
The dispute threatened the domestic supply of batteries for electric vehicles. The settlement prevents delays in the development of U.S. electric vehicles and supplies.
Georgia’s politicians, both Democrats and Republicans, have been pressuring President Biden to act on behalf of their state. Gov. Brian Kemp, a Republican, wrote to the president last month asking him to veto the commission’s decision for the sake of Georgia’s economy and the thousands of jobs that will be created at the battery factory.
“I congratulate both companies on working through their significant differences to resolve this dispute, which builds confidence in their reliability and responsibility as a supplier to the U.S. automotive industry,” Trade Representative Katherine Tai said in a statement. said about the settlement.
President Biden called the settlement agreement “a victory for American workers and the American car industry” in a statement on Sunday. “An important part of my plan to build better is to have the electric vehicles and batteries of the future built here in America, across America, by American workers.”
Officials of Mrs. Tai’s office and elsewhere in the Biden administration met with the companies in hopes of encouraging an agreement. Georgia Democrat Senator Jon Ossoff also worked “intensively” on the mediation, as DealBook reported Friday.
“A week ago, talks between these companies came to a standstill and 2,600 jobs in Georgia were at risk,” he said. Ossoff said in a statement. The settlement ensures, according to him, “thousands of jobs, billions in future investments, and that Georgia will continue to be a leader in the production of battery batteries for years to come.”
As part of their agreement, SK Innovation will give LG Energy Solution a total of 2 trillion ($ 1.8 billion) in lump sum and royalty payments. They also agreed to withdraw all pending disputes in the United States and Korea and make no new claims for the next ten years.
In 2013, the Obama administration vetoed a decision by the International Trade Commission in a dispute between Apple and Samsung based on public interest. But such disapproval is rare, and the settlement has spared Biden’s government not to take a stand. LG is building a plant in Ohio that will supply batteries for General Motors electric vehicles, and Ohio Gov. Mike DeWine, a Republican, also wrote to President Biden about the dispute last month, urging the president not to does not veto the decision and argues that SK may not be allowed to take advantage of ‘stolen intellectual property’ against its state workers.
The decision of the Trade Commission would have excluded SK from the local US market, while allowing the company to fulfill existing contracts with Ford and Volkswagen. But the plant in Commerce, Ga., Is still under construction, and SK is reluctant to proceed with its construction as it would not be able to do additional business.
LG objected to SK overestimating its importance to the domestic battery supply and suggested that another company would buy the plant in Georgia if SK abandoned it. But any disruption of plans in Georgia could have been a problem for U.S. automakers and the administration, as the international battery supply for electric vehicles is already tight and the government’s green energy transition plans depend on expanding the use and production of electric vehicles.