The Biden government on Saturday avoided one of the most challenging tests of its climate agenda when two South Korean battery giants disputing trade secrets reached a settlement to keep a massive factory building in Georgia open, according to sources familiar with the negotiations.
The White House has faced a Sunday deadline to decide whether it will have to veto a decision by the US International Trade Commission from February, which barred SK Innovation from importing the materials needed to make electric vehicle batteries to build at some $ 2.6 billion plant in Commerce, Georgia.
The case illustrates the dual priorities of the new government, as it seeks to eradicate the US economy’s pollution from planetary warming, while primarily targeting China for intellectual property protection.
As early as Friday night, the company looked far from an agreement with rival LG Energy Solutions in Seoul, which convinced the federal commercial court that SK Innovation had destroyed evidence of stolen trade secrets. In February, SK Innovation imposed a ten-year import ban on SK Innovation, jeopardizing the supply of batteries for Ford’s electric F-150 pickup and Volkswagen’s Crossover range, threatening the 2,600 jobs the company plans to carry out in Georgia. over the next few years.
The ruling also jeopardized President Joe Biden’s plans to electrify the country’s 276 million unusual cars, America’s largest source of climate pollution.
The agreement will also put an end to other ongoing U.S. lawsuits between the two companies, including one in a federal court in Delaware that came to a standstill until the ITC saga was completed.
By the end of Biden’s first term, SK Innovation’s plant will account for more than 35% of the US production capacity of electric vehicle batteries, when the country is expected to have about 11 large power pack manufacturing plants online.
SK Innovation An aerial photo from 2020 of the SK Battery America site in Commerce, Georgia, shows construction already underway.
This is likely to force carmakers to rely more on batteries manufactured in China, which in turn builds about 100 battery-powered plants.
The settlement, the details of which were announced on Saturday morning, is likely to help reverse the ruling and enable SK Innovation to keep its plant open.
The agreement is a political victory. Leaders across the biased spectrum insisted on an outcome that would leave the plant open. Gov. Brian Kemp (R), Georgia, pleaded with Biden to veto the decision if a settlement is not reached. In recent weeks, Senator Jon Ossoff (D-Ga.) Has held at least one meeting to market a deal.
Eventually, the impending deadline and the great importance of a decision that would determine the future of a U.S. that would for almost exponential growth in the next decade led to an agreement with the eleventh hour.
The loss of the factory without an agreement or veto would cause a chill in the US battery market, as it looks like it will attract more players, says Caspar Rawles, an analyst at Benchmark Mineral Intelligence, a London-based research firm specializing in a lithium ion. batteries and electric vehicle supply chains.
“The message you are sending to companies for legal reasons by actually striking a factory in America does not deliver a good message,” he said before the deal was announced. “This is not the most inviting investment environment for someone who wants to spend billions of dollars, and then there is a risk that something will happen and that there will be a legal intervention and they will lose everything.”
A presidential veto would have been a rare step. The last time the power was used was in 2013, when President Barack Obama blocked an ITC ruling that would prevent Apple from importing iPads. Ronald Reagan set the record and made four ITC decisions, including one that happened to deal with batteries.
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