The US International Trade Commission (ITC) today announced a ruling in the court clash between two South Korean EV battery manufacturers: LG Chem and SK Innovation.
UPDATE: SK Innovation issued the following statement after the ITC ruled in the LG / SK EV battery case:
“SK Innovation will enter into immediate discussions with our customers, Ford Motor Company and Volkswagen, as a result of the ITC’s decision. We are seriously concerned about the commercial and operational implications of this decision for the future of our EV battery facility in Commerce, Georgia, which is expected to employ 2,600 people as soon as it is completed soon. We also believe that the ITC ruling could have a serious detrimental effect on President Biden’s policies to combat climate change and extend the electrification of the U.S. motor fleet in the coming years. We look forward to conducting detailed discussions with Biden administration officials who will review the ITC’s decision and implement the president’s policy regarding electric vehicles and the environment. ”
The case began in the spring of 2019 when LG Chem sued Innovation over alleged theft of trade secrets. SK Innovation defends itself, but in the end the ITC sided with LG Chem.
According to the announcement, SK Innovation EV battery business (import, domestic production and sale of batteries for electric vehicles) is banned in the USA for ten years. However, not to harm its customers (who hoped to “catastrophic disruption of supply”), Allow ITC to continue the Ford F-150 Electric program for 4 years, and Volkswagen ID.4 (MEB) program for 2 years, to give them time to find new suppliers.
In other words, it looks like SK Innovation could complete its two battery plants (under construction) in Georgia to supply Ford and Volkswagen. But will it complete them?
Well, we are not sure what the options are for the next few years until the ban ends. Maybe production of batteries for other markets / other applications or leasing / selling the plant to another manufacturer just to limit the losses? It is difficult to imagine that the brand new plants would remain idle for 8 and 6 years.
In any case, there are not as many battery suppliers ready to supply the required amount of batteries, so the race is on. LG Chem’s LG Energy Solution, CATL, Panasonic or maybe others have their chance.
We do not yet know the answer from SK Innovation, but LG Energy Solution has issued a press release announcing a daring victory:
“LG energy solution prevents SK innovation in final decision on theft of trade secrets at the International Trade Commission
SEOUL, South Korea – (BUSINESS WIRE) – LG Energy Solution, the world leader in bag-type lithium-ion battery technology, on Wednesday triumphed over SK Innovation and SK Battery America in a US $ 1 billion trade dispute. International Trade Commission. Today’s Commission decision blocks the import, domestic production and sale of SK Innovation batteries for electric vehicles that illegally rely on the trade secrets of LG Energy Solution.
“SKI’s total disregard for our warnings and intellectual property rights has left us with no choice but to pursue this matter and we are grateful to the International Trade Commission for protecting our innovations and significant economic investments in the United States,” said Jong. Hyun Kim, CEO of LG Energy Solution. “As a world leader and technology innovator, we will further strengthen the protection of intellectual property rights.”
In April 2019, LG Chem and its US manufacturing unit filed a complaint with the International Trade Commission, accusing SK Innovation and SK Battery America (“SKI”) of trade secret theft by appointing dozens of engineers, manufacturing and critical business staff members. . In December 2020, LG Chem split its electric battery division into a new wholly owned subsidiary, LG Energy Solution, which now owns the trade secrets over which disputes exist.
Referring to a record proving that SKI had extensively expanded and deliberately destroyed evidence of its trade secret theft, an administrative judge issued an initial ruling imposing a default judgment in favor of LG Chem in February 2020. The decision, in which it was found that SKI had acted in bad faith. to impede the court’s investigation and administration of justice was ratified by the full Commission today.
The final decision of the Commission provides two important remedies for the theft of SKI, including the introduction of a ten-year exclusion order to stop the importation of batteries, battery cells, battery modules, battery packs. The Commission also issued a supplementary termination order to prevent SKI from manufacturing or selling such products in the US.
The Commission granted a limited exception to allow SKI to supply Ford electric batteries for its EV F-150 pickups for four years and to Volkswagen for its MEB line for the North America region for two years, after which the full force and effect of the exclusion and termination orders will remain. The order also provides for the repair or replacement of batteries for Kia vehicles sold by the date of the order and originally equipped with SKI batteries, as agreed by LGES and Commission staff.
Using the stolen technology from LG Energy Solution, SKI improperly obtained lucrative contracts with U.S. automakers, whose orders amounted to billions, and negotiated historic subsidies and incentives from state and local governments to build a new manufacturing facility in Georgia. SKI’s new plant in Georgia would have relied on the stolen trade secrets of LG Energy Solution, and the ITC ruling has definitively banned the use of LG Energy Solution’s illegal technology. ‘